TMI Tax Updates - e-Newsletter
December 1, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
-
Income Tax:
Reopening of assessment - even without passing the order u/s 143(3), where the proceedings are pending, a notice u/s148 of the Act was issued to RJA asking it to file a return - This was impermissible in law - HC
-
Income Tax:
Deduction u/s 54 - There is also no restriction that what percentage of the size of flat should be used for residential purposes either under the Income Tax law but there is a restriction of maximum construction by the local authorities of the respective states. - AT
-
Income Tax:
TDS u/s 194C OR 194J - the expression 'manager' and consequently 'managerial service' has a definite human element attached to it and similarly, the services 'consultancy' also necessarily intends human intervention - there is no dispute that there is 'human interface' in rendering service provider to the assessee. - AT
-
Income Tax:
Business of plantations in Malaysia - applying the test of permanent establishment the income from the plantation would be taxable only in Malaysia and not in India. - AT
-
Income Tax:
Claim of interest on share capital - interest paid on share capital goes to reduce the interest collected by the Society from its Members and it would not form part of profit. - AT
-
Income Tax:
Levy of penalty u/s 158BFA(2) - when the assessee has voluntarily accepted the undisclosed income bona-fidely for the purpose of buying peace of mind and to avoid protracted litigation, there is no question of imposing penalty - AT
-
Income Tax:
Entitlement to deduction U/s 54 - Assessing Officer cannot allow deduction claimed during the course of assessment proceedings, it can be claimed only in revised return filed before him. The assessee’s return was belated, which cannot be revised under the law. - AT
-
Income Tax:
Revision u/sec. 263 - CIT has exceeded his jurisdiction in directing the Assessing Officer to initiate penalty proceedings u/s 271(1)(c) - AT
-
Income Tax:
CBDT has issued Explanatory Notes to the provisions of the Finance Act 2015 in relation to various amendments in the Income Tax Act, 1961
-
Customs:
Provisional release of goods - Section 110A - Maintainability of appeal -An appeal lies before this Tribunal against an order passed by Commissioner of Customs under Section 110A of the Customs Act, 1962 for provisional release of the goods - Tri (5 Member Bench)
-
Customs:
Levy of customs duty on goods cleared from SEZ to DTA and non-processing area of the SEZ - Custom duty at the rate of 16% advalorem levied by Notification dated 27.2.2010 could not be imposed retrospectively w.e.f. 26.6.2009 and, therefore, retrospective amendment is illegal and arbitrary and deserves to be set aside. - HC
-
Customs:
Levy of anti dumping duty - anti-dumping duty is levied for the protection of domestic industry and not to safeguard the interest of the revenue - HC
-
Customs:
Valuation of Imported goods - Inclusion of royalty in assessable value of goods - because there are no such identical goods, the onus does not shift to the importer to prove that the declared value is not the transaction value u/s 14 - AT
-
Customs:
Valuation of the goods for export which are "football goalkeeper gloves" - Undervaluation - the transaction value as declared by the appellant for claiming duty drawback is the correct value - AT
-
Customs:
100% EOU - duty payable on debonding - assessee had capitalized certain spare parts - revenue took the view that by this process, the value of the capital goods has increased - appellant cannot be accused of suppressing the relevant information from the Department - AT
-
Corporate Law:
MCA decided to relax Additional Fees and Extend the last date of filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) upto 30.12.2015. - Circular
-
Service Tax:
Waiver of pre deposit - organization like C-DIT was set up by Government should be a model to others as far as compliance with law is concerned. Unfortunately, in this case the appellant has not been able to show any efforts made by them to ensure full compliance with the legal provisions - AT
-
Service Tax:
CENVAT Credit - credit for the input services like car parking, furniture rentals, DG Set charges, facility maintenance charges - needless to say that all the input services which are subject matter of this case have nexus with the output service(s) of the appellants - AT
-
Central Excise:
Denial of refund claim - Unjust enrichment - returned of excess duty through debit / credit Notes - appellant admittedly accounted for the said amount as ‘receivable’ in the balance sheet, it is a sufficient evidence to hold that incidence of duty has not been passed on - AT
-
Central Excise:
Job Work - claim of full exemption under notification no. 214/86CE whereas the principal manufacturer availing the area based exemption from duty under notification no. 50/03 - the extended limitation period under proviso to section 11A(1) would not be invokable and the duty demand would be sustainable only for the normal limitation period - AT
-
VAT:
Cancellation of registration - proof of address - petitioner contended that, there is no mandatory provision in the Tamil Nadu Value Added Tax Act, 2006 that the Petitioner has to produce no objection certificate from the landlord. - petition dismissed - HC
-
VAT:
Works contract activity or pure sales activity - printing annual report as per the specification - mere fact that in the execution of the contract for work, the paper owned by the assessee stands transferred to the contractee incidentally would not lead to the inference that the transaction is only a sale and not a works contract. - HC
Articles
Circulars / Instructions / Orders
News
-
Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
-
Auction for Sale (Re-Issue) of Government Stock
-
Foreign Investment
-
Development of Industries
-
Trade Between India and Africa
-
FDI in E-Commerce Sector
-
Setting up National Investment and Manufacturing Zones (NIMZs)
-
National Manufacturing Policy
-
Shri A.K. Jain, Member, CBDT to discharge the duties and responsibilities of the post of Chairperson, CBDT in addition to his own duties; Ms. Anita Kapur, Chairperson, CBDT who is superannuating today, is appointed as Adviser on Tax Reforms for a period of six months
-
National Rubber Policy
-
Trade Share of India with BIMSTEC Countries
-
RBI Reference Rate for US $
-
Japan’s Official Development Assistance Loan worth ₹ 5,479 crore to India for Chennai Metro and Ahmedabad Metro Projects
Case Laws:
-
Income Tax
-
2015 (11) TMI 1455
Addition made under Section 68 - ITAT deleted the addition - Held that:- The Assessee had been asked by the CIT (A) to produce 7 directors of the Table III companies. 6 directors appeared and their statements were recorded. They had confirmed that they had subscribed to the share capital of the Assessee. These directors had not only produced the books of accounts but showed that the source of investment was duly recorded therein. The Revenue on the other hand did not produce any further evidence to dispute the above evidence produced by the Assessee. As far as Table II shareholders were concerned, if the Revenue was of the view that they were simply using the Assessee for parking their undisclosed income, then it was certainly open to the Revenue to make additions to the income of those Table-II companies. As far as Table-I shareholders was concerned, none of them denied having made the investment in the Assessee company. The AO does not appear to have undertaken any particular investigation into the affairs of the Table-I, II or Table III companies apart from issuance of the notices under Section 131 of the Act which were duly responded to. Detailed findings have been given by the ITAT in the present cases after a thorough examination of the records. These have been extracted hereinabove. The Court finds no reason to differ from the decision of the ITAT in its rejection of the very same contentions urged before the Court by the Revenue. In particular, the Court concurs with the ITAT that the mere fact that some of the investors have a common address is not a valid basis to doubt their identity or genuineness. Also, the fact that the shares of the Assessee were subsequently sold at a reduced price is indeed not germane to the question of the genuineness of the investment in the share capital of the Assessee. The question of avoidance of tax thereby may have to be examined in the hands of the person purchasing the shares.. Some of the investor companies for e.g., Quality Security Services Pvt. Ltd. (b) United Head Hunters Pvt. Ltd. and (iii) Wellset Pharma & Drugs Pvt. Ltd. have been shown to be filing returns and being assessed on a regular basis. Some of them have been shown to be in existence even before the incorporation of the Assessee. Indeed the Revenue was unable to produce material to substantiate its case that the genuineness and creditworthiness of the investors and the source of the money received by the Assessee by way of investments in the AYs in question was not satisfactorily explained by the Assessee. - Decided in favour of assessee.
-
2015 (11) TMI 1454
Applicability of section 44BBA - AO held that in terms of Section 44BBA, 5% of the gross receipts were to be deemed to be taxable income on a presumptive basis - Whether ITAT was correct in law in holding that Royal Jordanian Airlines is liable to be taxed in India under the Income Tax Act, 1961 for the assessment years1994-95, 1995-96, 1996-97 and 2000-0I? - Held that:- Consequent upon the above order dated 29th August 2008, the AO passed separate orders for each of the AYs 1994-95 to 1998-99 and 2000-01 on 16th October 2009 noting that RJA had produced all the necessary bills and invoices etc, in support of the computation of losses in its profit and loss accounts. Accordingly, the AO accepted the income to be nil. It is significant that the Revenue has accepted the order dated 29th August 2008 as well as 29th March 2009 passed by the ITAT and not challenged the said orders by filing appeals before this Court. As a result, the consequential order of the AO dated 16th October 2009 accepting the income of RJA to be nil for AYs 1994-95 to 1998-99 and 2000-01 has also attained finality. Consequently, the question framed in these appeals for AYs 1994-95 to 1996-97 and 2000-01 as regards the liability of RJA to tax under the Act has been rendered academic. As regards the appeal of the Revenue for the AYs 1989-90 to 1993-94, with the Revenue having accepted the interpretation of Section 44BBA qua RJA for the AYs 1994-95 to 2000-01, the same would apply even as regards AYs 1989-90 to 1993-94. In as much as Section 44BBA is not charging provision, but only a machinery provision, it cannot preclude an Assessee from producing books of accounts to show that in any particular AY there is no taxable income. The Court, therefore, concurs with the view expressed in this regard by the ITAT in its order dated 29th August 2008, which in any event has not been challenged by the Revenue and has attained finality. In other words, the Court concurs with a view that where there is no income, Section 44BBA cannot be applied to bring to tax the presumptive income constituting 5% of the gross receipts in terms of Section 44BBA(2) of the Act. No doubt, for that purpose the Assessee has to produce books of accounts to substantiate that it has incurred losses or that its assessable income is less than its presumptive income, as the case may be. The ITAT has noted the factual position regarding the losses incurred by RJA for the mentioned years. This has not been disputed by the Revenue in its appeal against the aforesaid order. Consequently, the question of RJA being asked to pay tax on presumptive basis under Section 44BBA for the said year, or the matters being sent to the AO for verifying the said facts does not arise. On application of Section 44BBA of the Act, there is no taxable income of RJA for the AYs covered by the said appeals. - Decided against revenue. Reopening of assessment - Held that:- Apart from the fact that no particular reason has been shown by the Revenue for not dropping the notice under Section 148 of the Act for AYs 1999-2000 and 2001-02, the Revenue also appears to have overlooked the fact that effective from 1st April 1999, there is a Double Taxation Avoidance Agreement (‘DTAA’) between Jordan and India. The financial position as regards the relevant financial year 2001-02 is also one where RJA has suffered losses. Therefore, in any event, the question of RJA having any taxable income for AY 2001-02 or being amenable to income tax does not arise. As regards the notice under Section 148 for AY 1999-2000, the Court finds that it was issued even while the proceedings which commenced with the notice under Section 143(2) of the Act issued on 26th December 2000 were not yet closed. In other words, even without passing the further consequential order under Section 143(3) of the Act, a notice under Section 148 of the Act was issued to RJA on 23rd February 2006 asking it to file a return for AY 1999-2000. This was impermissible in law and there are at least two decisions of this Court that support the Assessee. These are KLM Royal Dutch Airlines v. Additional Director of Income Tax (2007 (1) TMI 138 - DELHI High Court ) and Commissioner of Income Tax v. Ved & Co. (2007 (2) TMI 212 - DELHI HIGH COURT ). This is, therefore, another reason why the notice under Section 148 of the Act for AY 1999-2000 is unsustainable in law. - Decided in favour of assessee
-
2015 (11) TMI 1453
Penalty proceeding under Section 271D - whether penalty proceeding is independent of the assessment proceeding? - Held that:- Penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed thereby setting aside the assessment order itself. It is in this backdrop, a question has arisen as to whether the penalty order, which was passed on the basis of original assessment order and when that assessment order had been set aside, could still survive. The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding under Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned order. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied. - Decided in favour of assesee
-
2015 (11) TMI 1452
Deduction u/s 54 - transfer of three adjacent plots - plot in the name of assessee and family members (Join ownership) - the house purchased from Rajasthan Housing Board was skeleton in which it was allotted as was envisaged by comparing the other houses which existed there. - Held that:- The first property was originally booked by Smt. Krishna Beniwal under Kalptaru Yojna of Rajasthan Housing Board in the year 1992 and thereafter she made payment up to 15/4/2006 to the Board by obtaining loan from bank of Rajasthan in the joint name of Krishna Beniwal and the appellant. The possession of house was taken by Smt. Krishna Beniwal and appellant jointly in November, 2006. The assessee filed an application before Rajasthan Housing Board on 31/5/2007 to adde her name, which has been accepted by it. The registration letter for lease deed was issued in the joint name of Smt. Krishna Beniwal and the appellant. All the payments were made 17 months prior to the date of sale of first flat i.e 20/10/2007. The possession letter was issued in the name of Smt. Krishna Beniwal on 7/11/2006 and possession was to be taken by Smt. Krishna Beniwal on or before 14/12/2006, which was taken by her on 15/11/2006. Perpetual lease was executed on 23/6/2007, in which name of Smt. Krishna Beniwal and Smt. Seema Singh Beniwal had been shown. As held by the various courts that purchase of constructed house in self financing scheme from any authority would be treated construction not purchase of residential house. Thus we uphold the order of the ld CIT(A) on first exemption claim U/s 54F of the Act. Therefore, we are not giving any finding on additional expenditure incurred on finishing of the house. It is clarified by the CBDT that purchase of plot of land is a part of residential house for claiming of deduction U/s 54F of the Act. The revenue itself has admitted that it is a habitable as a servant quarter, which in other words, was habitable for human being either servant or master or any employee. There is also no restriction that what percentage of the size of flat should be used for residential purposes either under the Income Tax law but there is a restriction of maximum construction by the local authorities of the respective states. It is also admitted fact that the assessee electric connection in the constructed premises and the first flat was sold by the assessee on 20/10/2007 and second flat was sold on 15/3/2008 whereas the assessee constructed room at plot No. C-114, Hanuman Nagar, Jaipur up to 15/3/2010 which is within three years from the date of sale of first flat i.e. 20/10/2007. Thus, the assessee is entitled to deduction U/s 54F of the Act on second investment at Hanuman Nagar property at Rs. 29,37,200/-. Accordingly, we reverse the order of the ld CIT(A) on this point.
-
2015 (11) TMI 1451
TDS u/s 194C OR 194J - whether services provided for payments made for supply of personnel would be technical service u/s.194J or mere contract u/s.194C? - Held that:- Taking note that the word 'technical' is preceded by the word 'managerial' and succeeded by the word 'consultancy' in CIT vs. Bharti Cellular Ltd (2008 (10) TMI 321 - DELHI HIGH COURT) held that the rule of noscitur a sociis is clearly applicable and this would mean that the word 'technical' would take colour from the words 'managerial' and 'consultancy' in between which it is sandwiched. Elaborating further, the Delhi High Court observed that it is obvious that the expression 'manager' and consequently 'managerial service' has a definite human element attached to it and similarly, the services 'consultancy' also necessarily intends human intervention. It was held by the Delhi High Court that the expression 'technical services' thus necessarily involves 'human element' or what is now a days fashionably called 'human interface'. In the case of Bharti Cellular Ltd (supra) before the Delhi High Court, the facility provided by MTNL and other companies to the assessee for interconnection/port access was one which was provided technically by the machines and since it did not involve any human interface, the Delhi High Court held that the same could not be regarded as 'technical services' as contemplated under S.194J of the Act. It is worthwhile to note that the decision of the Delhi High Court in the case of Bharti Cellular Ltd (supra) was challenged by the Revenue before the Supreme Court, and although the Supreme Court in the judgment reported in [2010 (8) TMI 332 - Supreme Court of India ], substantially agreed in principle with the meaning assigned by the Delhi High Court to the expression 'fee for technical services', as appearing in S.194J, they found that the question of human intervention was never raised even upto the level of the Tribunal. The Supreme Court also felt that some expert evidence was required to be brought on record to show how a human intervention takes place during the course of rendering of the services. The matter, therefore, was restored by the Supreme Apex Court to the file of the Assessing Officer with a direction to decide the same afresh, after examining a technical expert. However in the present case, there is no dispute that there is 'human interface' in rendering service provider to the assessee. Being so, the said decision is squarely applicable to the assessee case and there is no need to sent the file back to the Assessing Officer to decide the issue a afresh. Decided against assessee
-
2015 (11) TMI 1450
Business of plantations in Malaysia - whether there was a permanent establishment in India? - whether plantation income received from Malaysian cannot be taxed in India? - Held that:- Admittedly, a similar issue was considered by the Supreme Court in the case of PVRM Kulandayan Chettiar (2004 (5) TMI 8 - SUPREME Court) wherein it was held that business income arising out of rubber plantations in Malaysia cannot be taxed in India because of closer economic relations between the assessee and Malaysia which determines the fiscal domicle of the assessee in terms of Article 4 of the DTAA between India and Malaysia; Being so, the Assessing Officer not justified in treating the assessee having permanent establishment in India. In Article 5(2)(g) the term "permanent establishment" shall include especially "a farm or plantation". In this case, the plantation in Malaysia would be the permanent establishment through which the business is carried on by the assessee and applying the test of permanent establishment the income from the plantation would be taxable only in Malaysia and not in India. The assessee already filed its return of income and the return filed for all these assessment years which was kept in record. Accordingly, in our opinion the order of the Commissioner of Income Tax (Appeals) is to be confirmed. - Decided in favour of assessee. Disallowance of expenditure - according to the assessee the said amount was incurred by the Malaysain branch of the company and the expenditure incurred by the head office of the company at Chennai was ₹ 15,65,918/- only which is allowable as income from business/other sources - Held that:- Under section 57 only expenditure incurred in connection with earning of income was allowable as deduction. The assessee admitted that the entire income is by way of interest from the bank deposits. It was seen that the expenditure made by the assessee towards salary, remuneration, commission, building maintenance etc, these expenses have no nexus with earning of interest on bank deposits and cannot be allowed as deduction u/s.57 of the Act. Further, the assessee made a plea before us that expenditure at head office at ₹ 15,65,918/- instead of ₹ 43,35,061/-. In our opinion, the Assessing Officer already brought on record the total expenditure at ₹ 43,35,061/- as recorded in earlier para. Being so, the contention of assessee counsel is devoid of merit as it is not based on any evidences. Accordingly, this ground of the appeal of the assessee is rejected Addition being ‘exchange rate fluctuation’ - Held that:- The assessee admittedly received the above amount on account of exchange rate fluctuation which is revenue receipt and the same to be liable to be taxed and it cannot be considered as notional entry Accordingly, this ground of the appeal of the assessee is dismissed. Reopening of assessment - Held that:- In the absence of any averment that the assessment is sought to be reopened by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the relevant assessment year, the very initiation of proceedings under section 147 by issuance of notice under section 148 after expiry of four years from the end of relevant assessment year is bad and cannot be sustained. - Decided in favour of assessee
-
2015 (11) TMI 1449
Revision u/s 263 - telescoping the un-reconciled creditors into estimated income - Held that:- What amount was considered for addition is the amount as per P & L Account submitted to the ROC. Assessee has calculated the amount of loss as per P & L Account being set off by the income offered in the P & L Account and only the additional income was offered to tax. The computation of income started with that of originally assessed income, consequent to the orders of the Ld. CIT(A) and the additional income as per the P & L Account subsequently filed. Net profit or loss as per the books of accounts was offered in the revised proceedings. Consequently, the opinion of the Ld. CIT that A.O. has telescoped the incomes is not correct. What the Addl. CIT has directed is the net income as per the P & L Account to be added to the already assessed income on the same turnover. In fact, the proceedings under section 148 resulted in assessing the assessee’s profit in business on estimation basis, having rejected the books of accounts and also making additions on the basis of books of accounts. Thus the orders passed by the A.O. are in fact is not prejudicial to the interest of the Revenue. One of the item which Ld. CIT has directed in his order under section 263 is also on interest income. The computation for A.Y. 2002-2003 indicates the original income as per the consequential order dated 17.07.2007 at ₹ 29,42,079 + Additional Income offered as per the P & L Account at ₹ 24,17,340 + Interest Income that too from the same P & L Account of ₹ 22,97,203 hereby determining the total income of ₹ 76,56,622. We are unable to find any error or mistake committed by the A.O. in assessing the higher figure than what was required under the Law. Similar is the case for A.Y. 2003-04 wherein the income as determined consequent to the order dated 04.05.2007 at ₹ 29,18,047 was taken and addition as per P & L Account filed subsequently at ₹ 24,14,094 was also added along with the interest income of ₹ 16,52,200 which according to the assessee is sale of scrap already considered in the P & L Account. Thus the revised income was determined at ₹ 69,84,340. As seen from the reasons recorded for reopening the assessment for A.Y. 2002-03, A.O. reopened the assessment for bringing to tax amount of ₹ 1,93,703 not disclosed in the original income but received as interest income and for A.Y. 2003-04 the interest income was at ₹ 2,89,800. In fact, the A.O. has added many times these amounts on which the assessment was reopened. Therefore, in our opinion, the proceedings of A.O. under section 143(3) read with section 147 are not prejudicial to the interests of Revenue and there is no error as considered by the Ld. CIT. - Decided in favour of assessee.
-
2015 (11) TMI 1448
TDS u/s 194I - non deduction of TDS - as contended by the assessee that the agreement is neither a Rent Agreement nor an agreement to take the cinema hall for exhibiting the film nor it was an agreement to take on rent the plant and machinery installed in the cinema hall but was an agreement for conducting of business and for the purpose of ensuring and boosting the business of film exhibition by M/s. Show Time Entertainment Pvt. Ltd the said agreement was entered by the assesse with cinema owner Held that:- We are of the opinion for the purposes of attracting section 194-I, the prime condition was that the payment of rent should be relatable to any use of land/building together with furniture, fixtures etc. From the perusal of the terms and conditions of the agreement referred above, it is clear that there is no corelation between the payment of ₹ 65,00,000/- and uses of cinema hall/plant and machinery. further we are of the opinion that the term ‘Rent’ is a periodical payment payable by the user of land , building etc to the owner/landlord of the land , building etc. In the present case the second party (the assessee) is not the user of the cinema hall/plant and machinery, moreover no, payment was made by the second party i.e. assessee . therefore we hold that the payment of 65 lacs were not in the nature of rent within the meaning of section 194-I of the Act and the said provision is not attracted . Thus the payment is not required to be made by the assessee (second party) to the first party, rather it was other way round i.e. the first party/ M/s. Show Time Entertainment Pvt. Ltd was required to make the payment to the second party/ assessee in case of excess collection. In fact, the assessee did not have any control over the funds as the funds were collected and managed ,by selling of tickets by the first party i.e. M/s. Show Time Entertainment Pvt. Ltd. and no money was being paid by the second party / Assessee to the first party / M/s. Show Time Entertainment Pvt. Ltd. Thus the provisions relating to the tax deduction at source do not come cannot come into play. Assured and guaranteed return by the assessee was given to the cinema owner in case of exhibiting of films by the cinema owner. There is no letting out of the cinema hall, plant and machinery, furniture and fixture for exhibition of films. We feel that the dominant and prime intention of the parties entered into agreement to conduct business and to give comfort level by the assessee to the cinema owner. The day to day maintenance and running of commercial activities remained with the owner of the cinema owner and the assessee had no control or interference whatsoever. The cinema was exclusively owned and managed by the cinema owner and the assessee was having no interference with selecting the films, exhibiting the films, issuing tickets, paying tax, maintaining statutory compliances whatsoever. Thus the agreement was not of letting out but was for conduct of business. - Decided in favour of assessee.
-
2015 (11) TMI 1447
TDS u/s u/s. 195(2) - maintainability or otherwise in law of section 40(a)(i) payment on Freight - Held that:- With regard to freight allowed to shipping companies, the matter, in our view, is squarely covered against the assessee by the decision in the case of Orient (Goa) (P.) Ltd. (2009 (10) TMI 575 - Bombay High Court ) wherein held that payment of demurrage charges, which assume the same nature as of freight charges, to a non-resident without deduction of tax at source, would attract section 40(a)(i) of the Act, i.e., unless certified for non-deduction u/s. 195(2). - Decided against assessee. Maintainability or otherwise in law of section 40(a)(i) payment on Commission - Held that:- Manner in which the business is undertaken, putting across this scenario, would fairly submit that the same is a distinct possibility, though he was not in a position to so affirm or commit in the matter. This is precisely why we stated both the assessee and the Revenue to be responsible for a complete factual indetermination of the matter. Merely stating that no services are rendered in India is under the circumstances of little consequence. It is, again, upon examining and ascertaining the nature of the services that the AAR in Wallace Pharmaceutical (P.) Ltd. (2005 (9) TMI 26 - AUTHORITY FOR ADVANCE RULINGS ) held that the services provided by Penser Group, a tax resident of USA, were not limited to USA and, further, utilized in India and, accordingly, payments thereto warranted deduction of tax at source. The AAR has, in our view, sought to correctly apply the law in the matter – the issue being principally factual. It is again on account of this that the Hon’ble Court in Elkem Technology (2001 (4) TMI 65 - ANDHRA PRADESH High Court ), upon examining the nature and scope of the activities, held that no question of law, much less a substantial question of law, arises. In the case of Toshoku Ltd. (1980 (8) TMI 2 - SUPREME Court ), the product was ‘tobacco’, essentially a commodity (or a generic product), and which could be sold as such, adhering to the specifications as may be stipulated by law. Under the circumstances, in view of the foregoing, we only consider it fit and proper, even as observed during hearing – and to the agreements by the parties, that the matter, setting aside the impugned order, is restored for proper factual as well as legal determination back to the file of the Assessing Officer (A.O.), who shall decide the same after allowing the assessee reasonable opportunity to present its case before him. Decided in favour of assessee for statistical purposes.
-
2015 (11) TMI 1446
Claim of interest on share capital - whether allowable to assessee or not? - Held that:- As rightly considered by the Ld. CIT(A), in the case of Co-operative Society, there is a liability to repay the share capital to the Member concerned once he ceases to be a Member. Therefore, the share capital in the hands of the Co-operative Society cannot be equated with the share capital of the company and it can be treated as ‘borrowed capital’. Same issue was considered by the Co-ordinate Bench in the case of Visakhapatnam Co-operative Bank Ltd., Vs. Addl. CIT [2011 (8) TMI 319 - ITAT VISAKHAPATNAM] wherein it was held that interest paid on share capital goes to reduce the interest collected by the Society from its Members and it would not form part of profit. - Decided in favour of assessee.
-
2015 (11) TMI 1445
Computation of long term capital gains - adoption of the fair market value as on 1st April, 1981 - rectification of mistake - Held that:- The common issue was the computation of long term capital gains and for that purpose, adoption of the fair market value as on 1st April, 1981 was necessary. It is noticed that after considering rival contentions, the Tribunal directed the A.O. to refer the valuation to the DVO and to consider the report of the DVO on the cost of acquisition as on 01.04.1981 for computation of capital gains. We find that the very same issue has been raised by the assessee [...] though in the Revenue’s appeal 1428/Hyd/2012 and this Tribunal after considering the decisions cited by the assessee before us now i.e., the decision of jurisdictional High Court in the case of CIT vs. Ashven Datla in ITTA [2012 (11) TMI 1098 - ANDHRA PRADESH HIGH COURT] has held that there was no mistake apparent from record which needs rectification. As can be seen the ITAT has not directed A.O. to adopt value of DVO as apprehended. Various options were given to A.O. to determine the fair market value including the DVO value. Therefore also, we are of the opinion that there is no mistake which require rectification.
-
2015 (11) TMI 1444
Estimation of Income - estimation of the assessee’s income, primarily on the basis of advance tax paid and rejection of books of account - CIT(A) deleted the addition - Held that:- Revenue has failed to contravene the finding of the Ld. CIT(A) in the impugned order that the Assessing Officer’s estimation of the assessee’s income, primarily on the basis of advance tax paid and rejection of books of account without finding any discrepancy or suppression of turnover, etc., is not sustainable. We concur with the view of the Ld. CIT(A) that it is difficult to accept the Revenue’s plea that payment of advance tax is tantamount to disclosure of income by the assessee or that it can be the sole basis for estimation of the assessee’s income. In this factual matrix of the case, we uphold the action of the Ld. CIT(A) in deleting the Assessing Officer’s estimation of the assessee’s income at ₹ 91.00 crores.- Decided against revenue Carry forward and set off of business loss and unabsorbed depreciation - CIT(A) allowed the claim - Held that:- As observed by the Ld. CIT(A), it is clearly evident that the Assessing Officer had not examined the assessee’s claim for carry forward and set off of earlier year’s business losses and unabsorbed depreciation. Revenue’s contention that the Ld. CIT(A) had directed the Assessing Officer to allow the assessee’s claim in this regard is factually incorrect. The Ld. CIT(A), as observed that since the Assessing Officer had rejected the assessee’s books of account summarily , he would not have examined the assessee’s claim for carry forward and set off of business losses and unabsorbed losses of earlier years and, therefore, directed the Assessing Officer to examine the assessee’s claim in accordance with law and also to dispose off the pending rectification applications, if any, in this regard. The Ld. AR of the assessee drew the attention of the Bench to the order giving effect to the impugned order of the Ld. CIT(A) wherein the Assessing Officer has examined and adjudicated on the assessee’s claim for carry forward and set off of unabsorbed losses and depreciation. - Decided against revenue
-
2015 (11) TMI 1443
Entitlement to deduction under S.54F - whether ‘a residential house’ stated in S.54/S.54F for allowing deduction means a single residential house or one consisting of multiple units - CIT(A) allowed claim - Held that:- Merely because a residential house consists of several independent residential units, deduction under S.54/S.54F could not disallowed. Respectfully following the decision of the Hon'ble jurisdictional High Court in the case of CIT V/s. Syed Ali Adil (2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT) as approved in the case of CIT V/s. Vittal Krishna Conjeevaram (2013 (12) TMI 1524 - ANDHRA PRADESH HIGH COURT) we have no option than to confirm the order of the CIT(A), which is in consonance with the principles laid down on the issue in dispute. - Decided against revenue.
-
2015 (11) TMI 1442
Addition on interest paid on unsecured loans - CIT(A) deleted the addition - Held that:- CIT(A) had considered the letters issued by the creditors demanding interest and threatening withdrawal of money for coming to a conclusion that the interest payment was a genuine allowable, business expenditure. There is no dispute that 50% of the total interest outgo pertained to preceding year. Assessee has also not disputed the claim of the revenue that there was no contract with the creditors for payment of any interest. However, as per the assessee it had taken a decision during the relevant previous year, in the meeting of its Board of Directors held on 23-03-2010 to pay interest from 01-04-2008 at the rate of 7%. Assessment order states that assessee could not produce any evidence regarding any dispute that share holders/directors on the question of interest. No doubt, assessee is relying on a resolution of its Board of Directors for payment of interest. Nevertheless, we are of the opinion, that at least some of the records produced by the assessee before the CIT(A) were not before the AO. Just because AO was present at the time of proceedings before the CIT(A), we cannot say that requirements of Rule 46A of IT Rules stood satisfied. We are of the opinion that the issue therefore, requires a fresh look by the AO for verifying the allowability of the claim in accordance with law. We therefore, set aside the orders of the authorities below with regard to the allowance of interest back to the file of the AO for consideration afresh in accordance with law. - Decided in favour of revenue for statistical purposes. Disallowance of prior period expenditure - CIT(A) deleted the addition - Held that:- Grievance of the revenue is that the evidence produced by the assesssee before the CIT(A) were not before the AO. In our opinion, the question whether there was any dispute with regard to cam charges between the assessee and M/s Bharath Mall and such dispute, if it existed, whether settled, require a detailed analysis before coming to a conclusion regarding the allowability of the claim made by the assessee. Unless and until such an exercise is carried out, it cannot be ascertained whether the claim is one of prior period expenditure or business expenditure incurred during the relevant previous year. In such circumstances, we are of the opinion that this issue also requires a fresh look by the AO. We therefore, set aside the orders of the authorities below and remit the issue regarding allowance of prior period expenditure also back to the file of the AO for consideration afresh in accordance with law. - Decided in favour of revenue for statistical purposes.
-
2015 (11) TMI 1441
Disallowance of proportionate interest - AO disallowed interest paid to HDFC Bank on car loan on the basis that the assessee had made huge interest free advances - Held that:- It is now a well established proposition of law that when assessee was having an adequate non-interest bearing fund, disallowance of interest paid on borrowed fund cannot be made since in such a case, there was no nexus between the advance given and borrowals made by the assessee. It is also not the case of the Assessing Officer that the loan was not taken for the business purposes. We thus while setting aside orders of the authorities below on the issue direct the Assessing Officer to delete the addition - Decided in favour of assessee. Disallowance under sec. 14A read with Rule 8D - Held that:- Assessing Officer before invoking the provisions of Rule 8D has to record his satisfaction in terms of sub-section (2) of section 14A of the Act. In the present case, when the assessee himself had disallowed the expenditure incurred on the management of its portfolio for earning the dividend income, the Assessing Officer had to record his satisfaction first that the expenditure shown by the assessee for earning the dividend income was not satisfactory before invoking the provisions of section 14A of the Income-tax Act, 1961 read with Rule 8D of the I.T. Rules to make disallowance there under. In absence of the compliance of such mandatory requirement, the Assessing Officer was not justified in making the disallowanc under sec. 14A of the Act read with Rule 8D of the I.T. Rules. - Decided in favour of assessee.
-
2015 (11) TMI 1440
Levy of penalty u/s 158BFA(2) - Held that:- When there is a bona fide surrender, undisclosed income is computed merely on the basis of such surrender, that too in the block period on lump sum basis, no penalty would be imposable u/s 158BFA(2) of the Act because there is no determination of undisclosed income by the assessee under clause (c) of Section 158BC which is the requirement for imposition of penalty. See CIT vs Harkaran Das Ved Pal [2008 (11) TMI 47 - HIGH COURT DELHI] A bare perusal of seized material shows that no additional investment by the assessee in acquisition of property has been made suggesting the undisclosed income nor any further investigation has been made by the A.O. regarding concealed income. In other words, there is no independent material on the file except voluntary acceptance of the assessee as to the undisclosed income sufficient to proceed with the penalty proceedings. From the undisputed facts and circumstances of the case, it is proved that when the assessee has voluntarily accepted the undisclosed income bona-fidely for the purpose of buying peace of mind and to avoid protracted litigation, no independent determination of undisclosed income as per Section158BF(c) and Section 158BB(1) of the Act has been a made, there is no question of imposing penalty u/s 158BFA(2) of the Act. - Decided in favour of assessee.
-
2015 (11) TMI 1439
Assessment under section 153C - Disallowance on account of administrative & other overheads - plea of the assessee was that for the year under consideration the return filed by the assessee having been deemed to be processed under section 143(1) of the Act, in the absence of any notice issued under section 148 of the Act it attained finality - Held that:- The return of income having been filed in 2011, proceedings have reached finality by 2013 on which date the officer, to whom the matters were transferred, had not initiated proceedings and thus the assessment can be said to have attained finality. Even otherwise it is not in dispute that there was no incriminating material found during the course of search in respect of the assessee herein and in fact no addition was made by AO on the strength of the documents seized, in this assessment year. Under identical circumstances the ITAT 'SMC' Bench - in the case of Empire Mall Ltd. (2015 (11) TMI 1358 - ITAT MUMBAI) wherein held that the proceedings initiated under section 153C are not valid and therefore the assessments made thereon were quashed. Consistent with the view taken by the ITAT in the aforecited cases I hold that the proceedings initiated under section 153C and the assessment made in the instant case is also not valid in as much as there is no incriminating material found during the course of search, pertaining to A.Y. 2011-12. Since the notice issued under section 153C is held to be invalid, the assessment made thereon has no legs to stand and therefore it is not necessary to deal with other disallowance. - Decided in favour of assessee
-
2015 (11) TMI 1438
Capitalization of Insurance Expenses incurred in respect two new Cars - Held that:- Disallowance of Assessing Officer on the basis that it is capital expenditure because the same is required to be incurred before the new car can be used. Before CIT(A), reliance was placed by Learned A.R. of the assessee on a judgment of Hon'ble Andhra Pradesh High Court rendered in the case of Nathmal Bankatlal Parikh And Company vs. CIT, A.P.-III [ 1979 (8) TMI 46 - ANDHRA PRADESH High Court]. Learned CIT(A) has observed in Para 4.3 of his order that this judgment is distinguishable on facts but in our considered opinion, CIT(A) is not correct in saying so. In fact this is the ratio of this judgment of full Bench of Hon'ble Andhra Pradesh High Court that the question whether a particular expenditure is capital or revenue in nature is only relevant for the purpose of allowing a claim u/s 37(1) of the Act and for allowing the claim of deduction u/s 30 to 36, the condition whether the expenditure is capital or revenue in nature is immaterial. The deduction on account of insurance expenses is allowable u/s 31 of the Act. Therefore, for allowing the claim of insurance expenditure u/s 31 of the Act, this aspect is not relevant as to whether this is capital expenditure or not as per this judgment of Hon'ble Andhra Pradesh High Court. Respectfully following this judgment of Hon'ble Andhra Pradesh High Court, we hold that the disallowance made by the Assessing Officer and confirmed by CIT(A) on account of payment of insurance premium is not proper and justified. We, therefore, delete the same. - Decided in favour of assessee. Addition in the value of closing stock - CIT(A) confirming the addition by discarding the recognized method of valuation of closing stock, namely, weighted average cost as consistently adopted by the assessee and accepted by the Department and by imposing the Fifo- Method of valuation of closing stock by the A.O. - Held that:- The addition made by the Assessing Officer is not justified because he cannot reject a recognized method of valuation of closing stock followed by the assessee and accepted by the Department in assessment year 1997-98 and 2004-05 as per assessment orders passed by the Assessing Officer in those years u/s 143(3) of the Act. The judgment of Hon'ble Rajasthan High Court cited by Learned A.R. of the assessee rendered in the case of CIT vs. Wolkem India Ltd. (2009 (1) TMI 241 - RAJASTHAN HIGH COURT) also supports this view of us because it was held by Hon'ble Rajasthan High Court in this case that if the method of valuation adopted by the assessee is a recognized method, it cannot be rejected on the ground that the net realizable value/market value has been determined on the basis of estimate. Respectfully following this judgment of Hon'ble Rajasthan High Court and in view of above discussion, we hold that the addition made by the Assessing Officer by rejecting the method of valuation of closing stock adopted by the assessee and by adopting FIFO method is not justified. We, therefore, delete the same.- Decided in favour of assessee. Disallowance of claim of deduction U/s 80IB - Held that:- We find that as per the assessment order a clear finding has been given by the Assessing Officer that the assessee has not adduced any documentary evidence to show that the assessee is manufacturing or producing any article or thing. He has also observed that the assessee has employed its sister concern M/s Sunrise Tannery for tanning of raw hides to finished hides and manufacture of shoe upper on job basis as also purchase of finished hides and export thereof. He has also noted that as per schedule of fixed assets, there is shoe upper machine of ₹ 1,96,515/- and embossing plate of ₹ 4,26,293/- and wages paid are ₹ 2,25,497/-. He has also noted that the electric power expenses debited to manufacturing account relates to M/s Sunrise Tannery which is borne by the assessee. He has also given a finding that all the hides have been processed on job basis. Learned CIT(A) has also given a finding that no evidence have been brought on record to substantiate that manufacturing and production is undertaken by the assessee to justify its claim of deduction u/s 80IB of the Act. But in the present case, this is not coming out that the manufacturing was done by sister concern under direct supervision and control of the assessee because the assessee is not debiting any amount on account of salary being paid to any technical expert who can do this direct supervision and control of the manufacturing process being done by the sister concern. - Decided against assessee.
-
2015 (11) TMI 1437
Penalty u/s 271(1)(c) - bogus liability - Applicability of Section 41(1) - Held that:- AO has questioned the genuineness of the liability and in absence of the requisite confirmation, has held the same to be a bogus liability. Where the liability itself has been held to be a bogus liability, where is the question of remission or cessation thereof. Thus, in the instant case, where the addition itself is doubtful under the provisions of section 41(1), the same cannot form the basis for levy of penalty. See COMMISSIONER OF INCOME TAX Versus BHOGILAL RAMJIBHAI ATARA[2014 (2) TMI 794 - GUJARAT HIGH COURT]. Thus we delete the penalty levied under section 271(1)(c)
-
2015 (11) TMI 1436
Entitlement to deduction U/s 54 - CIT(A) allowed claim - Whether the appellant assessee could make a claim for deduction other than by filing a revised return? - Held that:- The ld CIT(A) has not provided any opportunity to the Assessing Officer as no details were submitted by the assessee during the assessment proceedings. Before us also no evidence has been placed. The assessee’s return is belated. The Assessing Officer is not supposed to entertain the deduction U/s 54F by relying on the decision of Hon’ble Supreme Court in the case of GOETZE (INDIA) LTD. v. COMMISSIONER OF INCOME-TAX [2006 (3) TMI 75 - SUPREME Court ] wherein held that the Assessing Officer cannot allow deduction claimed during the course of assessment proceedings, it can be claimed only in revised return filed before him. The assessee’s return was belated, which cannot be revised under the law. Therefore, the revenue’s appeal is set aside to the Assessing Officer and the Assessing Officer is directed to give reasonable opportunity of being heard and consider the above observation made by this Bench. - Decided in favour of revenue for statistical purposes only.
-
2015 (11) TMI 1435
Addition on disclosed additional income - Held that:- For the total cash payment of ₹ 38 lac for first time, in reply to show cause notice, the assessee faintly urged that the statement by the director was not voluntary and sought to retract it. The tribunal refused to accept such retraction. Dismissing the assessee’s appeal, the Hon’ble High Court held that the tribunal was correct in adding back amount after adjusting expenditure. As the retraction in the extant case also came after a long time and further it is contrary to the evidence found at the time of survey, we, therefore, approve the view of the ld. CIT(A) in not accepting the retraction made by the assessee. As regards the advance of ₹ 13 lac, the assessee filed a letter before the ld. CIT(A) from one Shri Mohammed Jamil, stated to be the owner of the said property. The ld. CIT(A) noticed that the receipt showed the name of Shri Amit Chauhan as the recipient and not Shri Mohammed Jamil. When this discrepancy was pointed out by the ld. CIT(A), the assessee could not explain anything. However, on a later date, an affidavit from Shri Amit Chauhan was filed denying the above transaction. Similarly, for ₹ 25 lac, the assessee filed a letter along with an affidavit in the name of Shri Atul Jain stating that he had not received the said amount from the assessee. In our considered opinion, these affidavits filed by the assessee before the ld. CIT(A) are self serving documents having no evidentiary value, when seen in the backdrop of the facts that the two documents evidencing the assessee having made payments of ₹ 25 lac and ₹ 13 lac were found from his own briefcase at the time of survey and he admitted that these represented payments made by him in cash out of commission income which was not recorded in the books of account. Adverting to the facts of the instant case, we find that the assesee came out with some self serving affidavits for the first time at the stage of the first appeal. These affidavits in our considered opinion have been rightly jettisoned by the ld. CIT(A) as the averments in them run contrary to the evidence found at the time of survey, which evidence was accepted by the assessee as correct. No exception can be found from the impugned order sustaining the addition to the tune of ₹ 26,50,500/-. The same is, therefore, upheld. - Decided against assessee
-
2015 (11) TMI 1434
Rejection of books of accounts - G.P. addition - sale of material treated as profit for working out the Gross Profit on contract receipts by AO - CIT(A) deleted part addition - Held that:- Held that:- CIT(Appeals) found that assessee had produced Hot Mix material from its plant for its contract work and the excess production was sold to outside parties leading to turnover of ₹ 43,06,319/- on this account. This finding of fact recorded by ld. CIT(Appeals) have not been rebutted through any material or evidence on record. It, therefore, stands established that amount of ₹ 43,06,319/- was the turnover and as such ld. CIT(Appeals) was justified in holding that it was not possible that there would be no cost of goods produced/sold as done by the Assessing Officer. It is well settled law that the turnover of the assessee could not represent the profit of the assessee. In the turnover of the assessee, only part amount is represented as income of the assessee. The cost of the material sold should have been deducted from the turnover in order to arrive at the profit of the assessee. The ld. CIT(Appeals), therefore, on the total turnover of ₹ 43,05,319/- of Hot Mix material correctly directed to apply profit rate for the purpose of making addition, therefore, rest of the addition of ₹ 39,61,815/- was rightly deleted. There is no error in the order of the ld. CIT(Appeals). - Decided against revenue.
-
2015 (11) TMI 1433
Unaccounted form of land development expenses and excess cash in proceedings under section 143(3) - Held that:- Both the authorities below have strongly relied upon survey statement of assessee’s partner Shri Nitin Kopikar whilst making the impugned additions totaling to ₹ 26.23 lacs. There is no supportive material quoted either in the course of assessment or in lower appellate order. The latter order runs into 19th full fledged pages out of which pages 5 to 19 highlight lacks of evidence, any incriminating material, survey statement being obtained in coercion etc. The CIT(A) brushes all of them aside by a single stroke without adverting to the same. We opine in this factual backdrop that the lower appellant order is not a detailed and speaking one with reasons thereof. Coming to the Revenue’s submissions placing a strong reliance upon the tribunal’s decision in the connected group case, we notice that the said assessee had failed to produce the original retraction affidavit (supra) therein which led an adverse inference. The instant appeal does not raise any such issue. We feel in these peculiar circumstances that once the CIT(A) has not taken into account all of the assessee’s argument in affirming the Assessing Officer’s action making the impugned additions, the matter deserves another innings in lower appellant proceedings.The Ld. CIT(A) shall pass a detailed speaking order. - Decided in favour of assessee for statistical purpose.
-
2015 (11) TMI 1432
Revision u/sec. 263 - contention of the assessee is that the CIT has not applied his mind and the show cause notice was prepared only by the ITO and the basic details as required are not available in the show cause notice - Held that:- Sec 263 allows CIT to call for and examine the records of any proceedings under the Income-tax Act, 1961, if he considers that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue, he may, after giving an opportunity to the assessee and after making such enquiry as he deems necessary, pass an order enhancing or modifying the assessment or cancelling the assessment. Therefore, what is required u/s 263 is an opportunity of being heard. Sec. 263 does not require the CIT to issue any show cause notice. Therefore, this Tribunal is of the considered opinion that even if there was any defect in the show cause notice that will not affect the consequential order passed by the CIT. This view of ours is fortified by the judgment of the Apex Court in CIT vs Electro House [1971 (9) TMI 10 - SUPREME Court ].- Decided against assessee Claim of depreciation in respect of machinery purchased from Germany - CIT(A) directed AO to allow 50% claim - Held that:- As from the material available on record, it appears that the machinery was installed and put to use on 25.9.2010. The Customs Authorities inspected the usage and running of the machinery on 4.10.2010. When the Customs authorities inspected the machinery on 4.10.2010, it is obvious that the machinery should have been installed and ready for use before 4.10.2010. Therefore, this Tribunal is of the considered opinion that the machinery was in fact installed on 25.9.2010 and it is ready for use. Therefore, machinery was put to use for more than 180 days and the assessee is entitled for full depreciation. Hence, the CIT is not justified in directing the Assessing Officer to allow only 50% depreciation. Accordingly, the order of the CIT is set aside and the Assessing Officer is directed to allow full depreciation in respect of the machinery purchased from Germany.- Decided in favour of assessee CIT to initiate penalty proceedings u/s 271(1)(c) - Held that:- The authorities under the Income-tax Act are empowered to perform judicial function. In other words, the authority concerned has to take an independent decision in respect of the case whether to initiate penalty u/s 271(1)(c) of the Act or not? Though the Assessing Officer is established under the provisions of the Income-tax Act, he is discharging a judicial function while initiating proceedings for levy of penalty. Therefore, no authority can direct the Assessing Officer to initiate penalty proceedings u/s 271(1)(c) of the Act. The Assessing Officer is expected to take an independent decision. In the course of any proceedings before the CIT, he may initiate penalty proceedings and decide the same on his own. However, the CIT has no authority to direct the Assessing Officer to initiate penalty proceedings. The direction of the Administrative Commissioner to initiate penalty proceedings would amount to interference with judicial function of the Assessing Officer. Therefore, this Tribunal is of the considered opinion that the CIT has exceeded his jurisdiction in directing the Assessing Officer to initiate penalty proceedings u/s 271(1)(c) of the Act. Accordingly, the order of the CIT is set aside and direction issued by the CIT to initiate penalty proceedings is quashed.- Decided in favour of assessee
-
2015 (11) TMI 1431
Rectification of mistake - Held that:- The assessee is merely criticizing certain observations of the Tribunal in its order dated 31.7.2013 and the action of the Tribunal in not following the decisions cited by the assessee, but following certain other decisions. An overall reading of the order of this Tribunal dated 31.7.2013 clearly reflects the consideration of all the contentions of the parties, including the decisions relied upon by them. No specific mistake apparent from record which has crept into the order of the Tribunal, warranting rectification/recall, has been brought out by the assessee. By the elaborate contentions in the present application, assessee is merely seeking a review of our order dated 31.7.2013, by criticizing the action of the Tribunal in following of certain decisions and not following certain others, which is not permissible in these proceedings under S.254(2) of the Act, the scope of which is confined to mere rectification of obvious/patent mistakes apparent from record, which might have crept into an order of the Tribunal. In the absence of any such mistakes specifically pointed out by the assessee in the present application, the same is liable to be rejected as devoid of merit. We do so accordingly and reject the application of the assessee. - Decided against assessee.
-
Customs
-
2015 (11) TMI 1492
Provisional release of goods - Section 110A - Maintainability of appeal - Whether an appeal lies before this Tribunal against the order passed by Commissioner (Customs) under Section 110A of the Customs Act, 1962 for provisional release of the goods or not - Held that:- An order of release or non-release cannot be deemed to be an order in the nature of adjudication. The second reason was that the request for release of goods and the consequent order by Commissioner was as per directions of the High Court and it was open to the appellant to make a grievance to that effect before the High Court. Hence, only one of the reasons provided to arrive at the finding in Navshakti Industries is a relevant ratio - viz. that a provisional release order cannot be deemed to be an order in the nature of adjudication. No detailed discussion preceded this conclusion. From the drift of the brief analysis in the said order it could be inferred that since an order for provisional release is to be passed 'pending the order of the adjudicating officer' such order is not adjudication order. Incidentally, in Navshakti [2008 (2) TMI 668 - CESTAT, NEW DELHI] the Tribunal was dealing with provisions of Section 110A prior to its amendment with effect from 08/04/2011. The Tribunal, in fact indicated the doubt regarding rank of the final adjudicating officer in that particular case. Order for provisional release restores the seized goods to the owner. The conditions imposed for such restoration is decided by the adjudicating authority. Such decision will certainly have legal consequence to the owner of goods. Revenue asserts that there is no lis at the time of issuing order of release of seized goods. This contention is misconceived. Neither Section 110A nor any other provision of the Act prescribes specific preset conditions or guidelines for exercising such powers. Apparently the adjudicating authority exercises wide ranging discretionary powers, not fretted by any express statutory conditions, pre-listing the types of order that could be issued. When a statute confers powers upon a public official to decide on a person's rights and interests, the principles of natural justice guide the exercise of that power unless specifically excluded by the statute itself. To state that a decision or order in exercise of such powers is of unilateral, administrative nature is not legally tenable Distinction sought to be made by categorizing some orders (like the one under Section 110A) as an interim order will not sustain legal scrutiny. Section 110A provides for restoring seized goods to the owner. No doubt the offence case is still pending final outcome. However, an order for provisional release is a stand alone order irrespective of the final outcome of investigation or adjudication. The same is not predicated by possible later outcomes. Refusal to release the goods or imposing harsher conditions for release will certainly have legal adverse consequences to the owner of the goods. Hence, the owner has to have a remedy which is statutorily provided under Section 129A. Provisions of Section 129A (1) (a) clearly authorize an appeal against an order or decision by the Adjudicating Authority issued under Section 110A. There is no legal basis to restrict the scope of such appeal in the absence of any restrictive conditions in the provision. An appeal lies before this Tribunal against an order passed by Commissioner of Customs under Section 110A of the Customs Act, 1962 for provisional release of the goods. - Decided in favour of assessee.
-
2015 (11) TMI 1466
Levy of customs duty on goods cleared from SEZ to DTA and non-processing area of the SEZ - retrospective levy - Challenge the constitutionality and legality of Government Notification No.25/2010-Customs dated 27.2.2010 - levy of customs duty at the rate of 16% advalorem has been levied on electrical energy removed from Special Economic Zone - The power supply from the power plant which is inside the SEZ area from where the power is supplied outside the SEZ area is in dispute in this petition. - Held that:- Petitioner should not be made liable to suffer double taxation, and the petitioner is made to pay the custom duty for the energy supplied then payment on duty of raw materials or any other duty on inputs should not be levied on the petitioner, and the duty paid by the petitioner on raw materials is liable to be refunded, as otherwise, the levy of duty on the power supplied to DTA from SEZ amounts to double taxation and it would be in violation of Article 265 of the Constitution of India. Custom duty at the rate of 16% advalorem levied by Notification dated 27.2.2010 could not be imposed retrospectively w.e.f. 26.6.2009 and, therefore, retrospective amendment is illegal and arbitrary and deserves to be set aside. Petitioner is entitled for exemption from payment of custom duty for the period 26.6.2009 to 15.9.2010 on the electricity cleared to DTA from SEZ. We are further of the considered opinion that the entire proviso to Government Notification No.25/2010-Customs dated 27.2.2010 is violative of Section 25(1) of the Customs Act, 1962 read with Section 30(a) of the SEZ Act, arbitrary and liable to be quashed. In view of the above, the said Notification No.25/2010-Customs dated 27.2.2010 as well as Notification No.21/2002-Customs as amended by Clause 60 of the Finance Bill, 2010 (Second Schedule thereto) are ultra vires Entry 83 of List I of Seventh Schedule of the Constitution of India, Section 12 of Customs Act, 1962 and Section 30 of SEZ Act, 2005 as well as Articles 14 and 265 of the Constitution of India and consequently deserves to be quashed and set aside. - Decided in favour of assessee.
-
2015 (11) TMI 1465
Levy of anti dumping duty - whether the respondents are justified in issuing demand notice seeking to recover anti-dumping duty on the sheet glass imported by the petitioner falling under CTH 70049099 - Held that:- designated authority in its final findings has below the table put a note stating that the subject goods were also being imported under other tariff headings as detailed thereunder and that the customs notification is indicative only and is not binding on the scope of that investigation. However, the Central Government, after considering the recommendations made by the designated authority, has not thought it fit to include the said note in the notification dated 13.3.2015. Insofar as the notification dated 13.3.2015 is concerned, the definitive anti-dumping duty is imposed only on sheet glass bearing Tariff Item No.70042011 and 70042019. Insofar as the goods in question bearing Tariff Item No.70049099 are concerned, no notification under rules 18 and 20 of the rules has been issued levying definitive anti-dumping duty on such goods. It follows as a necessary corollary that in the absence of any anti-dumping duty being levied under rules 13 and 19 of the rules, the respondent authorities do not have any authority in law to demand or collect any anti-dumping duty in relation to the goods not covered by the notification. Under the circumstances, the impugned demand notice as well as the communication dated 30.3.2015 are without any authority of law and therefore, cannot be sustained. The very premise on which the respondents seek to recover anti-dumping in respect of sheet glass falling under Tariff Item 70049099 viz. to safeguard the interest of the revenue, is itself fallacious, having regard to the fact that anti-dumping duty is levied for the protection of domestic industry and not to safeguard the interest of the revenue. - Decided in favour of assessee.
-
2015 (11) TMI 1464
Waiver of pre-deposit - Confiscation of exported goods - Classification of machined rigs - Classification under Chapter Sub-heading 84829900 or under Drawback tariff item No. 848221 - Held that:- Appellate Tribunal had thought it fit to direct pre-deposit of ₹ 48,03,301/- as against the demand of excess drawback of ₹ 2,71,78,810/-, whereas the Commissioner (Appeals) has thought it fit to direct the petitioners to pre-deposit ₹ 24,00,000/- and ₹ 10,00,000/- in relation to demand of excess drawback of ₹ 48,03,301/-. Evidently therefore, the amount of pre-deposit as directed by the Appellate Tribunal and the Commissioner (Appeals) in more or less similar circumstances is highly disproportionate. Under the circumstances, the case of the petitioners would fall within the ambit of “undue hardship” as held by the Supreme Court in the case of Benara Valves Ltd. v. Commissioner of Central Excise (2006 (11) TMI 6 - SUPREME COURT OF INDIA). Besides, apart from the merits of the order of the Commissioner (Appeals), as pointed out by the learned counsel for the petitioners, the classification issue which is involved in the appeal before the Commissioner (Appeals) stands concluded by an order dated 29.10.2015 of the Appellate Tribunal in favour of the petitioners. Under the circumstances, the petitioners have a prima facie case for waiver of pre-deposit. When the court has found merit in the case of the petitioners and the matter does not involve any disputed question of fact, there is no bar against this court exercising powers under Article 226 of the Constitution of India merely because of the existence of an alternative statutory remedy. Under the circumstances, this court, having already applied its mind to the merits of the case and the scope of the controversy being narrow, does not deem it fit to relegate the petitioners to avail of the alternative remedy under the statute. - relief granted - Decided in favour of assessee.
-
2015 (11) TMI 1463
Ex-parte decision - opportunity of hearing was not provided - gross violation of principles of natural justice - Finalization of provisional assessment - availment of Customs Duty Exemption on the basis of forged project implementing authority certificates - Held that:- Since the petitioner disputes the very service of notice with regard to hearing of the case as well as the failure on the part of the authority to afford an opportunity of personal hearing and the learned standing counsel appearing for the respondent, on the other hand pointed out the absence of the petitioner and his counsel on the date of hearing, this court is inclined to direct the petitioner to file an appeal under Section 129(A)(1) of the Customs Act, 1962 before the authority namely, Special Bench of the Customs, Excise and Service Tax Appellate Tribunal at New Delhi, within a period of three weeks from the date of receipt of a copy of this order. - Petition disposed of.
-
2015 (11) TMI 1462
Revocation of CHA License - Clearance of goods on the basis of forged documents - Held that:- Commissioner after going through the evidence on record had come to a concrete finding that the petitioners were not able to prove that the said authorisation letter was signed by an authorised representative of M/s. Zen Electronics. - there is a flaw in that part of the order of the learned Commissioner dealing with the prayer of learned counsel for the petitioners to “cross-examine the above persons”. Even if a person’s testimony was not being relied upon, he could still be cross-examined or called as a witness by the other party for obtaining some favourable statements, which the other party may use. That right seems to have been denied - But, otherwise, the order appears to be well reasoned. - If the petitioners are desirous of preferring an appeal from the impugned order dated 19th December, 2013, it would be open to them to lead whatever evidence that they may consider fit and proper to prove that the subject letter of authorisation was actually issued by an authorised representative of M/s. Zen Electronics. - Petition disposed of.
-
2015 (11) TMI 1461
Suspension of CHA license - Hearing of appeal - Held that:- an order has been made with regard to the suspension of the petitioner under Sub-Regulation (7) of Regulation-22 of the Customs House agents Licensing Regulations, 2004 and the right of appeal accrued to the petitioner has been exercised, the petitioner is entitled to have its appeal heard. - Appeal disposed of.
-
2015 (11) TMI 1460
Valuation of goods - Inclusion of royalty in assessable value of goods - Inclusion of lump sum fees paid/payable by the appellant to Renault under the Technical Assistance and Engineering Services Agreement - Held that:- when the Agreement terminated after production of 51000 vehicles, how the royalty would be payable in terms of the Agreement. It is also not the case of Revenue that royalty was paid in respect of 51000 vehicles. The Commissioner has clearly not understood the plain language of the Agreement and has come to a conclusion that the royalty becomes due and payable and is therefore includible. This part of the demand is clearly unsustainable. - royalty is related to the spare parts manufactured by the appellant and has no relation to the parts imported by the appellant. The Commissioner has not even discussed this issue. However, since the Commissioner has set aside the Order-in-Original which had held that such royalty is not includible, we find it necessary to give our decision on this issue. We hold that the royalty on spare parts manufactured is not includible while arriving at the assessable value. Agreement provides for increasing localization of indigenous parts to reach a level of 50% by value of total imported parts and components. Therefore, it cannot be said that the lump sum payment is a condition of the sale of imported goods when the Services Agreement provides for local sourcing and procurement. - Exhibit-I to the Services Agreement titled as "Description of Services” which is reproduced at page 14. The purpose of this document is stated to include services for localization of parts. The Resources for localization plan are to be shared between Renault and the appellant (para 2.1.3 of Exhibit). Para 3.1.5 of the Services Agreement provides for training of company personnel. All these activities are nowhere related to import of parts. Payment for such activities cannot be included in transaction value under Section 14. Value shall be the transaction value. The second part is that the transaction value shall include engineering, design work, royalties and license fees, as specified in the Rules made. The Rules are the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Under these Rules, transaction value shall be accepted subject to certain restrictions specified in paras 2(a) to 2(d) of Rule 3. In the present case, the restrictions do not apply. We find that in the present case Revenue has not put forth any evidence to demonstrate that the invoice prices are not the real prices. Neither has it adduced any evidence to show that part of the invoice price was passed off as the lump sum payments for services provided. Coming to the second part of the law laid down in Section 14 of the Act, we find that certain additions to the value, as laid down in the Rules, are mandatory. If the importer cannot demonstrate the value of identical goods or deductive value of identical goods, or computed value of identical goods it is because there are no such identical goods. In these circumstances the onus does not shift to the importer to prove that the declared value is not the transaction value under Section 14. In such cases it is for Revenue to come up with good evidence to reject the transaction value. Revenue has no evidence to reject the transaction value, but has only resorted to Rule 10. We have already held above that, even in terms of Rule 10, the lump sum payment is not liable to be included in the price of the imported goods. - Decided in favour of assessee.
-
2015 (11) TMI 1459
Penalty under section 114(iii) and section 114AA - involvement in inflating the export price and the purchase documents in respect of synthetic fabric being exported under the DEPB scheme with intention to avail the higher incentive - Held that:- Granting three consecutive days of hearing i.e. at short intervals of a week or so cannot be considered as the reasonable opportunity afforded to the appellant before deciding the case. Moreover neither the order of the ld.Commissioner nor any evidence is produced by the Revenue showing that the communication of the hearing on 14.01.2013 was duly served to the appellant. In these circumstances we arrive on the conclusion that a reasonable opportunity of hearing was not provided to the appellant before imposing penalty on him and therefore principle of natural justice has been violated by the adjudicating authority. - we aside the order of imposition of penalty on the appellant with the direction that the ld.Commissioner shall decide the case afresh after giving a reasonable opportunity of hearing to the appellant - Decided in favour of assessee.
-
2015 (11) TMI 1458
Valuation - Enhancement in value - Provisional assessment - exemption Notification No.21/2002-CUS dated 01.03.2002 under Sl.No.212B, condition 28B - Held that:- On perusal of the Notification No.21/2002-CUS dated 01.03.2002 and the corresponding entry under Sl.No.212B we find that the impugned Notification does not cover the Palladium metal and therefore we hold that the ld.Commissioner(Appeals) has rightly held that the benefit of the said Notification is not available to the appellant and the value was correctly determined on the basis of contemporary import under Rule 6 read with Rule 8 of Customs Valuation Rules-1988 after rejecting the provisions of Rule 4 & 5. - No merit in appeal - Decided against Assessee.
-
2015 (11) TMI 1457
Valuation - Adjudicating authority rejected the value declared and adopted the value as been allowed at by the chartered engineer’s appointed by them - Held that:- There is no serious challenge from the main appellant as to the ascertainment of the value by the chartered engineer appointed by the Customs Department it is a case of the appellant that the ascertained value of the cranes by the chartered engineer, appointed by the Department as to the value of the cranes in the year of manufacture even if taken, depreciation at the rate of 70% of the value as ascertained by the chartered engineer, should have been given. Adjudicating authority has summararily discarded this plea of the appellant's that they are eligible for the benefit of depreciation as per as per board’s circular recording that it is simple procedure which has been intimated by the board. We do not agree with the findings of the adjudicating authority. In our view, board’s circular of 1987 regarding the depreciation is to be followed by the adjudicating authority. We find strong force in the contention of the learner Counsel that entire issue needs reconsideration by the adjudicating authority on various other submissions made by the appellants before him as also the benefit of depreciation as per board’s circular. Upholding the claim of the main appellant that benefit of depreciation as per board circular needs to be given, we set aside the impugned order and remand the matter back to the adjudicating authority to reconsider the issue afresh keeping all other issues open for both sides. - matter remanded back - Decided in favour of assessee.
-
2015 (11) TMI 1456
Valuation of the goods for export which are "football goalkeeper gloves" - Clim of duty drawback - Held that:- value needs to be arrived based upon cost of production of manufacture or processing of export goods, charges for design and an amount towards profit. In the case in hand, the revenue authorities though being made aware of the supplier of the goods which were exported, did not bother to check with the supplier to ascertain the correct value of the goods. In our considered view, jumping directly to provisions of Rule 6 of the Valuation Rules for ascertain value by residual method is not in consonance of the law inasmuch as it is settled law that to determine value of goods sought to be exported, the provisions of Valuation Rules should be applied sequentially. To our mind, the appellant have a case in their favour as they have demonstrated that the goods which were exported were procured from a credible supplier whose name address and VAT number were available. In the absence of any contrary evidence, we hold that the transaction value as declared by the appellant for claiming duty drawback is the correct value. - impugned order which upholds the re-determination of the value of the goods for export is incorrect and is liable to be set aside - Decided in favour of assessee.
-
2015 (11) TMI 1430
100% EOU - duty payable on debonding - assessee had capitalized certain spare parts - revenue took the view that by this process, the value of the capital goods has increased and accordingly at the time of debonding, duty of ₹ 50,85,814/- should have been paid on this amount after 10% depreciation. - Interest u/s 28AB - Held that:- Even though spare parts have been capitalized, in our view once the spare parts have been used for replacement of the old and worn out machinery parts, the same become part of the machinery and they loose their separate identity. The use of these spare parts for replacing the old and worn out parts of the machinery would not increase the value of the machinery. At the time of debonding, the duty is payable on the value of the duty free raw materials and the depreciated value of the imported or indigenously procured capital goods and for this purpose, the value of the capital goods cannot be enhanced by the value of the spare parts used from time to time, even if the same have been capitalized. - at the time of debonding, the Jurisdictional Inspector, Central Excise, after checking their records and stock, had determined the appellants duty liability and had communicated the same under his letter dated 10/04/04 and at that time also he had checked the account of receipt and consumption of the imported as well as indigenously procured spare parts - appellant cannot be accused of suppressing the relevant information from the Department and, therefore, no justification for invoking the extended period under proviso to Section 28 (1) of the Customs Act, 1962 and, as such, the show cause notice dated 19.02.2009 is time barred. - impugned order is not sustainable on merits as well as on limitation. The same is set aside - Decided in favour of assessee.
-
Corporate Laws
-
2015 (11) TMI 1426
Buy back arrangement - collaboration for profitable implementation - Appellant contended that as his buy-back from HSIDC, was a transfer of shares from a State level financial institution to a co-promoter of the Target Company, it was exempt under Regulation 10 - Tribunal dismissed the contention stating that the exemption under Regulation 10 was only with respect to making a public announcement and does not permit the Appellant from not disclosing the transaction for the purpose of calculating the minimum offer price - whether the transaction of buy-back of shares which transpired between the Appellant and HSIDC was required to be disclosed in the public announcement dated 24.4.1999 Held that:- It is evident from a reading of the Regulations 10, 11 and 12 the buy-back transaction between the Appellant and HSIDC was incapable of triggering Regulation 10, as the said transaction was protected by Regulation 3. However, the acquisition of the entire share capital of Garg by the Appellant attracted Regulation 10 as the acquisition was in excess of 15%. Further, as this transaction was between two promoters, it did not have the protection of Regulation 3. As required under Regulation 10, the Appellant did make a public announcement, but did not disclose its buy-back transaction with HSIDC. The Appellant has vainly and incorrectly attempted to justify his act of non-disclosure by stating that the transaction with HSIDC was protected by Regulation 3, which placed it beyond the ambit of Regulation 10, 11 and 12. In our view, Regulation 3 only protects a transaction between a co-promoter and a State financial institution to the extent that, as a consequence of such transaction a public announcement will not be required to be made as provided under Regulations 10, 11 and 12. However, it does not imply that the said transaction is to be protected from the rigours of other Regulations provided for under the Act. Thus, the transaction between the Appellant and HSIDC will have to be subject to Regulations 16 and 20, and the rate at which the Appellant bought back the shares from HSIDC had to be disclosed in the public announcement. Find no force whatsoever in the contention of the Learned Counsel for the Appellant that the post-dated cheques forwarded to HSIDC enclosed with letter dated 15.4.1999 were given by way of a guarantee, especially in light of the fact that the same was denied by HSIDC in its letter to SEBI dated 11.1.2001, wherein HSIDC stated that the post-dated cheques had been issued in consideration of the buy-back of shares. Cheques presented dishonoured on presentation - It has already been held beyond doubt that the post-dated cheques issued by the Appellant in favour of HSIDC were in consideration of the buy-back of the shares held by HSIDC in the Target Company. The Appellant had submitted that the cheques were post-dated because he was suffering from a liquidity crunch. In our view, the post-dated cheques amounted to a promise to pay and that promise would be fulfilled on the date mentioned on the cheque. Thus, this promise to pay amounted to a sale of shares/equity. The subsequent dishonouring of the post-dated cheque would have no bearing on the case. At the time of making the public announcement the Appellant had bought back the shares of HSIDC by making payment via the said post-dated cheques. Further, as the buy-back was in pursuance of an agreement, there was consensus ad idem. The Appellant has subsequently shirked his responsibility and has tried to slither away from honouring the agreement, which he cannot be allowed to gain from, as is established by the legal maxim commodum ex injuri su non habere debet. As per Regulation 2 Clause (1) Sub-clause (a)- ‘acquisition’ means directly or indirectly acquiring or agreeing to acquire shares or voting rights in, or control over, a Target Company. This definition clarifies that an acquisition takes place the moment the acquirer decides or agrees to acquire, irrespective of the time when the transfer stands completed in all respects. The definition explicates that the actual transfer need not be contemporaneous with the intended transfer and can be in futuro. Also the letter on which the Counsel for the Appellant had placed reliance to prove that there was no acquisition, is dated 9.12.1999, which was well after the public announcement dated 24.4.1999 where the Appellant was required to make disclosures in compliance with the Regulations. This clearly indicates, that at the date of making the public announcement the Appellant was under the impression that the acquisition has taken place.
-
Service Tax
-
2015 (11) TMI 1491
Waiver of pre deposit - delay in issue of show-cause notice - management, maintenance or repair service - Held that:- There is absolutely no evidence to show that there were efforts to find out their liability over a period of five years. It has to be noted that contrary to the claim of the appellant, the prejudice has been caused to the Revenue because thee delay in issue of show-cause notic has compelled the Revenue to issue show-cause notice only from 2006 whereas if the notice were to be issued earlier probably earlier period could have also been covered. Therefore delay in issue of show-cause notice has not caused any prejudice to the appellant. The general principle is that even ignorance of law cannot be an excuse but in this case even after the legal position was brought to their notice, for a period of five years till the notice was issued appellants did not do anything. Further, organization like C-DIT was set up by Government should be a model to others as far as compliance with law is concerned. Unfortunately, in this case the appellant has not been able to show any efforts made by them to ensure full compliance with the legal provisions and no evidence was shown to us in this regard. - appellant has not been able to make out a case on limitation or on tax to be paid in respect of four services which have been considered and in respect of these four services itself the amount directed to be deposited earlier may not cover more than half the liability of service tax and interest. - Partial stay granted.
-
2015 (11) TMI 1490
Imposition of penalty - Held that:- The basic contention of the Appellants is that Commissioner (Appeals) has not appreciated the facts and circumstances of the case and has not applied his mind and has issued a non-speaking order and the penalty imposed on the Appellants is unjustified and unsustainable. - a perusal of the OIA reveals that the commissioner (Appeals) has examined the circumstances of the case and has taken a conscious decision to uphold the penalty imposed by the Adjudicating Authority on well reasoned grounds - no reason to interfere with the OIA - Decided against assessee.
-
2015 (11) TMI 1489
Demand of service tax - Commercial and Industrial Constructions Service - whether the respondent herein is liable to discharge the service tax during the period 10.09.2004 to 31.03.2008 on an amount received by him towards the work executed which the department feels falls under the category of "Commercial and Industrial Constructions Service" while the respondent feels that the work is executed under a "works contract" hence would be liable for tax only from 01.06.2007 - Held that:- penalty which is sought to be imposed is unwarranted in as much the entire issue of whether the composite contract/works contract should be vivisected or not was the question of dispute before the judicial forum. The five Members full Bench of the Tribunal has concluded the issue in March 2015 hence the issue being a question of classification and the valuation, we are of the view that the respondent could be entertained a bonafide belief as to non-applicability of service tax on the contract executed by them. We find that the respondent had a reasonable cause of non-discharging the service tax for the material period in question. By invoking the provisions of Section 80 of the Finance Act, 1994, we waive the imposition of penalty under Section 76 of the Finance Act, 1994. - Petition disposed of.
-
2015 (11) TMI 1488
Demand of service tax - Rent-a-Cab services and Tour Operator services - Held that:- Appellant paid the tax after detection by the Central Excise officer in 2007, for the period 2002 to 2007. On a query from the Bench, the learned Counsel submits that the appellants charged the service tax on the gross amounts, but they paid the tax after deduction the tax on TDS amount which has not been deposited with the Government. Therefore, the penal provisions should be followed. After considering the submissions of both sides, we find that imposition of penalty under Section 78 of the Finance Act, 1994 is sufficient and therefore, other penalties would be liable to be set-aside. Learned Chartered Accountant also submits that the adjudicating authority had not given option to pay penalty under Section 78 of the Act of 25% of the tax alongwith interest and penalty within 30 days. - demand of service tax on Rent-a-Cab service alongwith interest and penalty under Section 78 of the Finance Act, 1994 is upheld and other penalties are set-aside. The appellant is given option to pay penalty 25% of the tax alongwith entire amount of tax and interest within 30days from the date of communication of this order, under Section 11AC of the Central Excise Act, 1944, read with Section 78 of the Finance Act, 1994. - Appeal disposed of.
-
2015 (11) TMI 1487
Business of commercial and industrial construction Service - benefit under the Notification No 12/2003-ST dated 20.6.2003 - Held that:- To safeguard the financial interest of the appellant, as a matter of precaution or as a matter of conservative policy, raised RA (Running Account) Bills to the customers charging Service Tax without claiming any abatement or other benefit in some cases and not in all cases. It is categorically stated that the fact remains that not a single customer has paid Service Tax at such higher or gross rates, i.e., without benefit of abatement etc. The appellant enclosed the statement with reply, marked Annexure BB giving details of Service Tax charged in the RA in respect of each party and the amount realised towards value of service and Service Tax from the party. The Learned Authorised Representative for Revenue drew the attention of the Bench the relevant portion of the Adjudication Order and submits that the appellant realised the tax on the gross value as revealed from the RA bills. - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.
-
2015 (11) TMI 1486
CENVAT Credit - credit for the input services like car parking, furniture rentals, DG Set charges, facility maintenance charges and so on used by the appellant for their Bangalore Head Office - Held that:- In view of assessee's own previous case [2015 (11) TMI 679 - CESTAT BANGALORE] there cannot be any two opinions that the appellant is entitled to cenvat credit for all these input services as well as for the facility of cenvat credit in case of the branches of the appellants which were earlier not found registered with the Service Tax Department. Non-registration, though the appellant pleads that they had made application and department did not do registration, may be by mistake, will not make them disentitled to the facility of cenvat credit for the input services which they have used for their output service; needless to say that all the input services which are subject matter of this case have nexus with the output service(s) of the appellants. - Decided in favour of assessee.
-
2015 (11) TMI 1485
Condonation of delay - Delay of 124 days - Held that:- The order-in-original is dated 26.2.2014 and had it been received in time, it is possible that appellant would have filed appeal prior to 6.8.2014 in which case no mandatory pre-deposit would have been required to be made. Be that as it may, as the Order-in-Original was received almost five months after its date the appeal was filed after 6.8.2014 and as has been held by Allahabad High Court in the case of Ganesh Yadav (2015 (7) TMI 304 - ALLAHABAD HIGH COURT), the mandatory pre-deposit of 7 1/2 % in such a case is non-derogable . However, the ld. Consultant for the appellant pleads that the entire delay in filing appeal took place because it took the appellant consideration time before they could arrange funds for making mandatory pre-deposit. - However, in the overall facts and circumstances of the case, the financial hardship as is prima facie evident form the "provisional state of affairs" (though unaudited) and bank statement and in view of the Supreme Court observations - Delay condoned.
-
2015 (11) TMI 1484
Demand of service tax - Liability prior to amendment made in sub class (zzb) of section 65 (105) - Held that:- Revenue appeal has to be dismissed of as we find that against the very same order respondent was in appeal before this bench in case [2012 (12) TMI 579 - CESTAT AHMEDABAD] holding in favor of the respondent here-in and setting aside the impugned order. - Impugned order is set aside - Decided in favour of assessee.
-
2015 (11) TMI 1483
Refund claim - C&F Agents’ Service - Held that:- The appellant has entered into an agreement with its principal for rendering services of C&F Agents. As per the said agreement, the appellant is paid consideration of an amount as commission/ remuneration for rendering services and is also reimbursed amounts of actual expenses incurred by them for rendering such service. There is no dispute that the appellant has discharged the service tax liability under ‘C&F Agent’s Service’ on the amount received as remuneration/commission. The dispute is regarding service tax liability on the amount received by the appellant as reimbursable expenses. It is undisputed that the amounts on which service tax is sought to be demanded are reimbursable expenses. If that be so, the judgment of the Honble High Court of Delhi in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. vs. Union of India [2012 (12) TMI 150 - DELHI HIGH COURT] will cover the issue in favour of the appellant-assessee. - If the appellant has taken the credit for such an amount the said amount cannot be included in the refund claim. The lower authority to pass an order after disallowing the amount of ₹ 44,957/-. It is also to be noted that the appellant has reversed an amount of ₹ 44,957/- along with interest and the said amount need not be considered by the lower authority while granting the refund - Decided in favour of assessee.
-
2015 (11) TMI 1482
Demand of service tax - Commercial training or coaching service - Bar of limitation - Held that:- Regarding the contention of Revenue that the Respondent did not include the advance received in the month of May and June, 2003 in its ST-3 returns for April ,2003 to September 2003 which proved suppression on its part, it needs to be mentioned that service became taxable from 1.7.2003 and so it is rather unreasonable to require (or expect from) the respondent to file ST-3 return from April, 2003 onwards. We find that the Commissioner (Appeals) has discussed the issue at length. We are in agreement with Commissioner (Appeals) regarding non invokability of extended period of limitation in this case, As the show cause notice was issued on 2.7.2006, the entire demand is beyond the normal period of one year and is therefore fatally hit by time-bar - impugned demand sustainable - Decided against Revenue.
-
2015 (11) TMI 1481
Demand of service tax - Goods Transport Agency service - Held that:- There is no dispute as to the fact that in this case the trucks/tractors which were used for transportation of sugarcane from the farmers fields to the sugar factory were of individuals. We find that the first appellate authority as well as the adjudicating authority have nowhere relied upon any contrary evidence to come to a conclusion to state that the trucks/tractors were not of individuals. On this factual matrix we find that the judgement of this Tribunal in the case of Laxmi Narayana Mining (2009 (9) TMI 71 - CESTAT, BANGALORE) which has been upheld by the Hon’ble High Court of Karnataka as reported in [2012 (8) TMI 651 - KARNATAKA HIGH COURT] could have directly applicable in this case. - Impugned order is set aside - Decided in favour of assessee.
-
2015 (11) TMI 1480
Waiver of pre deposit - "Commercial or Industrial Construction Service" (CICS) and "Construction of Complex Service" (CCS) - Held that:- Substantial amount of demand amounting to more than ₹ 55 lakhs pertains to construction of houses under JNNURM which prima facie was not liable to service tax in view of the CBEC circular cited by the appellant. There is also force in the contention of the appellant that the value of goods was not includible in the assessable value. The taxability of the other services rendered requires a careful examination. We do note that in the case of BG Shirke Construction vs CCE, Pune [2013 (2) TMI 584 - CESTAT MUMBAI] CESTAT granted stay in respect of construction of the sports stadium stating that this prima facie would not be covered under the scope of CICS. We also notice that the appellant has deposited ₹ 26,45,334/- towards the impugned service tax liability. - amount already deposited meets the requirement of section 35F of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994 and accordingly we waive the requirement of any further pre-deposit and stay recovery of the remaining impugned liability during pendency of the appeal. - Stay granted.
-
2015 (11) TMI 1479
Penalty u/s 76 & 77 & 78 - Enhancement of penalty - Held that:- Issue relating to applicability of service tax on MICR services was under dispute and this issue was taken up by the Indian Banks Association with the Ministry of Finance. CBEC vide its letter No.137/1/2005-CXA, dated 25.02.2005 replied that Indian Banks Association's representation had been rejected and that IBA should advise all the member Banks to pay service tax with interest at the earliest. It is seen that on receipt of the advice of the IBA, the respondent paid service tax and also the interest thereon. In the circumstances, we are of the clear view that there was no wilful misstatement or suppression of facts in this case and there was reasonable cause for failure to deposit the service tax initially. Indeed, as noted above, having regard to the facts and circumstances, CESTAT vide its order dated 12.01.2009 set aside the penalty under Section 76 ibid and for the reasons alike, the Commissioner (Appeals) was fully justified in invoking Section 80 for waiving penalty under Section 78 ibid. Further, when the facts and circumstances do not indicate any wilful mis-statement or suppression, penalty under Section 78 ibid is not attracted. - Decided against Revenue.
-
Central Excise
-
2015 (11) TMI 1478
Waiver of pre deposit - area based exemption - Refund under notification no. 56/02-CE - The allegation against VKM is that during the period from December 2004 to November 2006, they did not manufacture any goods in their factory and only showed production in their records and thus have wrongly claimed the refund under notification no. 56/02-CE by the way of credit entries in PLA - Held that:- It is also seen that while the present Show Cause Notice dated 05.01.2010 alleges that during the period from December 2004 to November 2006 there was no manufacturing activity and on this basis seeks to recover the refund of ₹ 42,37,24,491/- from the appellant, for subsequent months, that is, for the period from December 2006 to August 2008, the Department has sanctioned the refund by different orders and for that period no Show Cause Notice has been issued. We are of the prima facie view, that Department cannot take contradictory stand for the period from December 2009 to November 2006 and for period from December 2006 to August 2008 when the machinery installed and the staff employed was the same. Even if statement of Sh. Atul Sharma, Manager of the Ahmadabad Branch of M/s Single Road Carriers, Delhi is believed, it would prove only the non transport of copper ingots of VKM from Delhi to Gujarat. By itself, this statement cannot lead to inference that there was no manufacture of copper ingots by Jammu unit of VKM and there was no transportation of copper ingots from Jammu to Delhi. - The allegation against VKM is showing bogus receipt of copper scrap and bogus manufacture and clearances of copper ingots without manufacturing and clearing any goods. This is the allegation which has been upheld against VKM in the impugned order. If this is so, there would be no duty liability against VKM and since VKM have paid the duty and have taken its refund under notification no. 56/02-CE, it amounts to non-payment of duty. Hence, in our prima facie view, there cannot be any fault recovery of duty from there as refund under notification no. 56/02-CE given to VKM is of the duty which was paid by them, while the same were not required to be paid. The real allegation against VKM would be the issue of bogus invoices of copper ingots and thereby enabling his customers to avail wrong Cenvat Credit, but neither the SCN sought imposition of penalty on VKM on this count nor the Commissioner has imposed penalty on VKM on this ground. - appellant have prima facie case in their favour. Therefore, the requirement of pre-deposit of duty demand, interest and penalty by VKM and the requirement of pre-deposit of penalty by Shri Shankar Lal Gupta, Authorized Signatory of VKM, Shri DK Jain of M/s Vikash Traders and the transporter KKR is, waived for hearing of their appeals and recovery thereof is stayed - Stay granted.
-
2015 (11) TMI 1477
Waiver of pre deposit - Duty demand - Clandestine removal of goods - Shortage of goods found - violation of the principles of natural justice - copies of all the RUDs and NRUDs had not been supplied with the SCN - Held that:- As regards the supply of RUDs and NRUDs, there is no dispute that the same are very large in number and probably for this reason only, the appellants were asked to collect the same from the office of Delhi Zonal Unit of DGCEI, as such a large number of documents cannot be sent by post along with show cause notice. The show cause notice had been issued on 5/5/2008 and the show cause notice itself requested the appellants to collect all the RUDs and NRUDs from DGCEI’s office. The show cause notice also had an Annexure –‘R’ which gave a complete list of the RUDs. From the records it is seen that the appellant took their own time in receiving the RUDs and NRUDs and only vide their letter dated 22/8/2008 addressed to ADG, DGCEI Delhi Zonal Unit informed DGCEI office that they have deputed their employee Shri Shyam Narayan to receive the RUDs and NRUDs. In the records of the case, there is an acknowledgement dated 25/8/2008 of Shri Shyam Narayan acknowledging that he has received and taken delivery of photocopies of all the RUDs as detailed in Annexure ‘R’ to the show cause notice dated 5/5/2008 issued to M/s. RIL and its Director and that two sets of the records RUDs have been received. Since they, in spite of the receipt of all the RUDs and NRUDs did not submit reply to the show cause notice they cannot insist on cross-examination. In view of this the appellant s plea that the order suffers from gross violation of principles of natural justice is prima facie not acceptable. It appears that the goods purchased from the five traders have been sold to them at the higher price. Thus, from the very nature of these transactions, the same do not appear to be genuine. In respect of the service transactions also, the service recipient have denied they had any dealing with the appellants. In view of this, burden of proof proving that the income shown from trading in iron and steel items, share trading and service transactions had actually been received from such transactions would be on the appellant, but the appellant have failed to produce any evidence in this regard. We are, therefore of the prima facie view that on this point, the appellant have not able to establish prima facie case in their favour. When the appellant company has shown substantial income from trading in iron and steel items, share trading and service transactions and on enquiry these transactions were found to be bogus, it will have to be presumed that this income is from manufacturing activity. Stock taking had been conducted in presence of the appellant's representative and at that time no complaint had been made by him that the weight had been determined by the eye estimation without actual payment. Therefore, at this point, the appellant do not have prima facie case in their favour. - it is seen that in a number of cases the goods had been supplied by the appellant through Shri Ravinder Jian to certain persons and those persons also have admitted the receipt of the consignment while in respect of those sales, goods no Central Excise invoices had been issued by the appellant company. Therefore, at this stage it is difficult to say whether confirmation of this duty demand is vitiated by not permitting the cross-examination of Shri Ravinder Jain. - this is not the case for total waiver from the requirement of pre-deposit. - Partial stay granted.
-
2015 (11) TMI 1476
Waiver of pre deposit - Exemption under Notification No. 6/02-CE - Use of fly ash more than 25% - The Department's contention is that the pipes in respect of which the exemption under Notification No. 6/02-CE dated 1/3/02 (Sl. No. 158) has been availed either do not contain fly ash or the fly ash content is much less than 25% and, hence, the same do not qualify for exemption - retraction of statements - Held that:- Though, the appellant plead that under the law, the appellant could use fly ash upto 40% in manufacture of AC Pressure Pipes and since the fly ash is free, while cement is much costlier, there was absolutely no incentive for the appellant company to use cement instead of fly ash. But fly ash is free only for those users who are located in close vicinity of the source of fly ash. For the appellant company, whose factory located at Bhilwara is at considerable distance of about 200 k.m. from the Kota and Suratgarh Thermal Power Plants, there would be transportation cost involved, besides the cost of loading at the Thermal Power Plants and also the cost of storage in the appellant company's factory which may involve constant spraying of water. In absence of data regarding transportation cost, loading cost and unloading and storage cost, the plea that fly ash is absolutely free and therefore there would be no incentive not to use it to the extent permitted, cannot be examined. Undue hardship to the assessee would exist only when on the basis of the evidence on record there is absolutely no case of the duty evasion/non-payment of duty against the assessee, while in this case this is not so. Therefore, on the basis of the twin consideration of undue hardship and safeguarding the interest of Revenue, this is not the case which would merit total waiver from compliance with the provision of Section 35F. - Partial stay granted.
-
2015 (11) TMI 1475
Waiver of pre deposit - Duty demand - Clandestine removal of goods - Shortage of finished goods - Recovery of kachcha parchis - Held that:- The copies of few Kachcha parchis which have been placed on record as well as the photocopies of the same have been reproduced in the impugned order, do show the supply having been made from ‘Saidpur’ indicating that under those Kachcha parchis, the goods mentioned therein have been supplied from the factory premises of HRE/HVRI located at Saidpur Village in Distt. Sonepat. The appellant have also not disputed the department s contention that in respect of the Kachcha parchis mentioned in Annexure B to the show cause notice, the details mentioned therein tally with the duty paid invoices issued by HRE/HVRI. Similarly, the fact that in respect of the Kachcha parchis mentioned in Annexure ‘C’ to the show cause notice, the details of the parchis tally with the invoices issued by HRE/HVRI except for the quantity mentioned in Kachcha parchis being higher than the quantity mentioned in the invoices, has also not been disputed. Therefore, there is some substance in the Department’s allegation that the Kachcha parchis whose details are given in Annexure A, B & C to the show cause notice pertaine to the clearances made from HRE/HVRI. Besides this, we also find in respect of some of the entries mentioned under the head stock out in the loose papers/registers recovered from the residential premises of Bansal Brothers, the details of the clearances tally with the details of the duty paid invoices and Kachcha parchis and therefore, prima facie, the entries under stock out heading also pertains to clearance from HRE/HVRI. In view of this factual matrix, notwithstanding the fact that all the Kachcha parchis and the documents on the basis of which the duty demand has been quantified have not been supplied to the appellant and the cross-examination of the customers whose statement has been relied upon has not been allowed and as such there appears to be violation of the principles of the natural justice, the order as such cannot be said to be totally unsustainable, and in any case there would be some duty demand against the appellant. Even though, there appears to be violation of the principles of principles of natural justice, in our view, still there would be some duty demand which ultimately would be confirmed against the assessee, and therefore, to that extent the interest of the Revenue has to be safeguarded. We also take note of the fact that while the appellant s Counsel plead that all the Kachcha parchis do not have the remarks indicating supplies having been made from Saidpur factory, they have not disputed the fact that the details of the Kachcha parchis detailed in annexure B to the show cause notice fully tally with the corresponding details of the duty paid invoices issued by HRE/HVRI and similarly, the derails of the Kachcha parchis mentioned in Annexure C to the Show cause notice tally with the details of invoices issued by HRE/HVRI except for the difference in the quantity. In view of this, we hold that this is not the case for total and unconditional waiver from the requirement of pre-deposit. - Partial stay granted.
-
2015 (11) TMI 1474
Waive of pre deposit - Valuation of goods - Section 4(1)(a) - Determination of assessable value - Demand of differential duty - Held that:- In terms of the provisions of Section 4(1)(a) of the Act, where the duty of excise is chargeable on any excisable good with reference to their value, then, on each removal of the goods, such value of the goods shall, in a case where the goods are sold by the assessee for delivery at the time and place of removal, the assessee and the buyers of the goods are not related and the price is sole consideration for sale, be the transaction value. According to clause (b) of Section 4(1), in any other case, including the case where the goods are not sold, the transaction value is to be determined in such manner as prescribed. In this regard, the Central Government has framed Central Excise Valuation (Determination of price of excisable goods) Rules, 2000. Thus, Section 4(1)(b) read with the Valuation Rules becomes applicable only when the transaction value under clause(a) of Section 4(1) is not available. The loss making price cannot be accepted as the normal price of the goods and that too when it is spread over a period of more than five years i.e. w.e.f. January, 2008 and it has to be inferred that the consideration could only be to compete with other manufacturers who are also engaged in the manufacture of the similar goods falling under the same Chapter Heading of CETA, 1985, the existence of extra commercial consideration while fixing the price would not be the ‘normal price’. No prudent businessman would continuously suffer huge loss only to compete market. - there is neither admission by Appellant that they lowered the price to level below the cost of production to penetrate the market nor there any evidence on record to support this allegation. If the Department’s stand is that lower price below the cost of product was to compete with the other manufacturer of comparable cars, that price as discussed above, cannot be held to be influenced by any extra commercial consideration. When the price is fixed keeping in mind the factors of the supply and demand, and also the price on which the competitors are selling the comparable product, the price determined may sometimes be more than the manufacturing cost and profit and sometimes may be less than the manufacturing cost and in the latter cases, it cannot be said that the price is influenced by the extra commercial considerations. Directing the appellant to pre-deposit the entire duty demand confirmed along with interest for compliance with the provisions of Section 35 F would certainly cause undue hardship. Therefore, the requirement of pre-deposit of duty demand, and the interest thereon is, therefore, waived for hearing of the appeal and recovery thereof stayed. - Stay granted.
-
2015 (11) TMI 1473
Waiver of pre deposit - Duty demand - Clandestine removal of goods - Parallel invoices - Held that:- Department mainly relies upon the statement dated 27/7/2010 of Shri Subodh Gupta and the documents recovered from his premises. However, besides this, there is also a lot of other evidence which indicates that SMS-Ghaziabad was receiving unaccounted copper ingots from Shivam, Mayank and Vasudev. On the day of search, i.e., on 27/7/2010, Investigating Officers intercepted a motor cycle driven by Shri Mohd. Ishraf at Swea Dham Mandoli Industrial Area and while his questioning was going on, a Tata 407 Vehicle with registration no. DL-1LM4572 was also intercepted by the officers. This vehicle was driven by one Shri Anil Kumar and another person named Shri Arvind Kumar, labourer of SMS-Ghaziabad was also sitting in the vehicle. It was loaded with copper ingots which according to the driver and Shri Arvind Kumar had been loaded from the premises of Maynak Metals, Binni Ki Bhatti, Mandoli Industrial Area, Sewa Dham, Shahdara. All these evidences indicate that SBU was firm floated by Shri Sandeep Gupta in the name of his employee Shri Subodh Gupta. It is also seen that while goods manufactured by SMS-Ghaziabad were being cleared under parallel invoices without payment of duty to M/s. Sandeep Metal Supply, Chawari Bazar, M/s. Sandeep Metal Supply were showing purchase of the same goods from a number of suppliers namely, M/s. Sai Enterprises, JMD Trading, M/s. Mahalaxmi Agency, M/s. M.K. Traders, M/s. First International Business Limited, Tirupati Marketing Sales India, Delhi, M/s. Shivam Traders-Delhi, M/s. Pacific Sales (India), Delhi, M/s. Aadhar Technology Private Limited-Dariyaganj, New Delhi and M/s. Apurva Enterprises-Ajmeri Gate, Delhi and on enquiry either these firms were found to be closed since long or were not existing or they denied having supplied copper strips or copper wires to M/s. Sandeep Metal Supply, Chawri Bazar. There is a lot of evidence on record against SMS-Ghaziabad and the copper ingots suppliers Shivam, Mayank and Vasudev and as such it cannot be said that entire case of the department against SMS-Ghaziabad, Shivam, Mayank and Vasudev is based only on the statement of Shri Subodh Gupta and on the basis of the documents recovered from his premises. - prima facie view that criminal complaint filed by Shri Sandeep Gupta against Shri Subodh Gupta before ACJM, Ghaziabad is only a strategy to dissociate himself from the documents recovered from the premises of Shri Subodh Gupta - this is not the case for total waiver from the requirement of pre-deposit and while granting dispensation from the provisions of section 35F of the Central Excise Act, 1944, the appellants, namely, SMS-Ghaziabad, Mayank, Shivam and Vasudev must be put to some conditions of pre-deposit to safeguard the interests of the Revenue. - Partial Stay grated.
-
2015 (11) TMI 1472
Duty demand - Estimation of production of production of goods used as Captive consumption - Non accounting of goods - assumptions and presumptions - Invocation of extended period of limitation - Held that:- Duty demand is based on that - (a) chromium content of SS billets/flats manufactured during the period of dispute, (b) chromium content of Ferro chrome used for manufacture of stainless steel billets, and (c) recovery percentage chromium content from Ferro chrome. It is seen that show cause notice dated 21.3.2000 demanding duty for the period 1.4.97 to December, 1999 had also been issued on the same basis, though chromium content of SS billets and percentage recovery of chromium from ferro chrome were different. In view of this, we hold that Prima facie the judgement of apex court in the case of Nizam Sugar Factory (supra) would be applicable to the facts of the present case and therefore, the extended period would not be applicable and hence, the duty demand would be sustainable confined only to normal limitation period. Prima facie view is that the duty demand is based on estimated production of SS billets/flats which has been determined on the basis of a series of assumptions. There does not appear to be any cogent basis for these assumptions. The apex court in the case of Oudh Sugar Mills Ltd. vs .Union of India- [1962 (3) TMI 75 - SUPREME COURT OF INDIA] has held that allegation of under reporting of production of clandestine removal of sugar on the basis of average percentage sugar recovery from sugar cane is not sustainable without tangible evidence of clandestine removal. In our view, the ratio of this judgement is squarely applicable to the facts of the present case. In this regard, we also find that no chemical test has been conducted to ascertain chromium content of SS billets or chromium content of Ferro chrome. There is also no basis for taking the recovery percentage of chromium from ferro chrome as 91.33% while in the earlier show cause notice dt.21/3/2000 recovery percentage of chromium from ferro chrome had been taken as 75%. Prima facie, the duty demand based on such arbitrary assumptions would not be sustainable. - Stay granted.
-
2015 (11) TMI 1471
100% EOU - duty demand on the stock of finished goods and work in progress on the date of in principle approval for debonding - extended period of limitation - Held that:- no central excise duty was payable on the stock of the finished goods on the date of in principle approval for debonding as a 100% EOU, even after in principle approval for debonding would continue to be treated as 100% EOU till the date of final debonding order. Duty demand on the Catylist, which had been imported free of customs duty and had been used as first charge - Held that:- Commissioner has confirmed this demand by going beyond the allegation made in the show cause notice and moreover, there is no evidence in support of his finding that the imported Catylist had not been used at all for first charge. Clearance of the pyridine residue consisting mainly of mixture of Lutadine Isomers to their DTA Unit - Held that:- even if the Pyridine Residue is treated as residue of chemical industry classifiable under Heading No.38256010, which is restricted for import, its DTA clearances cannot be treated as not in accordance with the restrictions in the Exim Policy, as the restriction on the import of certain items in the Foreign Trade Policy cannot be treated as restrictions on the DTA clearances of the same items manufactured by a 100% EOU. The duty demand is prima facie not sustainable either on merits or not on limitation and as such - Stay granted.
-
2015 (11) TMI 1470
Denial of refund claim - Unjust enrichment - returned of excess duty through debit / credit Notes - claimant has not been able to prove that the burden of excise duty had not been passed on to the buyers - Held that:- appellant, though initially charged duty in the sale invoice, who on clarification that they have paid the excess duty, issued credit notes and against the said credit notes, the buyer of the goods has returned the excess charged excise duty. The appellant accounted for the said amount in their balance sheet as receivable under the head loan and advances. The lower authority verifying these facts and following the direction of the Commissioner (Appeals) given in the earlier order dated 5.2.2008 applying the ratio of the ONGC case (2003 (10) TMI 108 - CESTAT, NEW DELHI), sanctioned the refund. It is not open for the Revenue to challenge the finding of the Commissioner (Appeals)’s order dated 5.2.2008 without filing any appeal against the same. Therefore, the impugned order of the Commissioner (Appeals) cannot be sustained. - it is settled that even if the excess duty for which refund is sought for is collected but subsequently returned by way of credit note, it cannot be said that the incidence of refund amount has been passed on. It is also observed that since the appellant admittedly accounted for the said amount as ‘receivable’ in the balance sheet, it is a sufficient evidence to hold that incidence of duty has not been passed on, otherwise the amount cannot be accounted for as receivable. - appellant is entitled for the refund and the learned lower adjudicating authority has rightly sanctioned the refund claim - Decided in favour of assessee.
-
2015 (11) TMI 1469
Duty demand - Discrepancy in stock - Clandestine clearances - reliance on retracted statements - Imposition of penalty - Held that:- Respondents were engaged in the manufacture of Man Made Fabrics on job work basis. According to the Revenue, the Respondent cleared clandestinely a quantity of 1107428 L.Mtrs. fabrics within 17/18 dates. The entire case was made out on the basis of one chit recovered from the pocket of Excise Supervisor of the Respondent Company. - On perusal of the impugned order, it is seen that the Central Excise Supervisor and the Respondent No.2 had retracted the statements. - very next day the Central Excise Officers visited the factory premises and conducted stock verification and no shortage/excess of goods was available from the stocks in the event of clandestine removal of the goods. The entire case was made on the basis of one chit recovered from the pocket of Excise Supervisor. It is noticed that the Excise Supervisor had retracted his statement. In this situation, it is difficult to accept the clandestine removal of the goods on the basis of the said chit, without any corroborative evidence. The Commissioner (Appeals) has also examined the case in the context of that no statement was recorded of the Dyeing Master or Printing Master. - there was a shortage of goods worth ₹ 1 Crore. - No reason to interfere the order of the Commissioner (Appeals) - Decided against Revenue.
-
2015 (11) TMI 1468
Restoration of appeal - Waiver of pre deposit - Appeal dismissed for non compliance with pre deposit order - Section 35F - Held that:- entries in the documents recovered from Sh. Gopal Krishan Agarwal also mentioned the vehicle number in which the goods had been transported and also the names of the customers but admittedly neither any inquiry had been conducted with the transporters nor any inquiry had been conducted with the consignees/customers. In follow up action, the factories of the appellant company had also not been searched and except for calling for the certain documents and recording of statements of their employees no other inquiries have been conducted. Statements of the Directors of the appellant companies have also not been recorded. - The most important part of section 9D which is relevant for the adjudication proceedings is sub section 2 according to which the provisions of sub section 1 shall, so far as may be, apply in relation to any proceedings under this act, other than proceedings before a court, as they apply in relation to a proceedings before a court. Thus the provisions of sub section (1) of section 9D which are applicable for prosecution proceedings before a court, by virtue of sub section 2 of section 9D, have to be applied as far as possible in respect of adjudication proceedings also. The word ‘so far as may be’ used in sub section 2 indicate that while the provisions of sub section 1 may not be mandatorily applied to adjudication proceedings but the same have to be applied as far as possible. In our view, when the case against an assessee is based only on the statements of a third party or the documents recovered from him, his cross examination would be necessary. There is gross violation of the principles of natural justice and hence, the appellants would have prima facie case in their favour. In view of this, the requirement of pre-deposit of duty demand, interest and penalty by the appellant company is waived for hearing of their appeals and recovery thereof is stayed - Stay granted.
-
2015 (11) TMI 1467
Job Work - claim of full exemption under notification no. 214/86CE whereas the principal manufacturer availing the area based exemption from duty under notification no. 50/03 - extended period of limitation - Held that:- M/s. Divya Pharmacy (principal) is not the manufacturer of dutiable and exempted final product but he is manufacturing exempted final products only. Therefore, in our prima facie view, the exemption notification no. 214/86CE would not be available. Principal manufacturer-M/s. Divya Pharmacy under their letter dated 6/5/2008 addressed to Assistant Commissioner of Central Excise, Bhiwadi District Alwar under whose jurisdiction, the appellant unit had intimated that they wish to remove the raw material without availing of CENVAT Credit to the appellant unit under notification no. 214/86CE; that the goods manufactured on job work basis would be returned to their factory for manufacture of final product which is exempted from duty under notification no. 50/03CE. Thus, the department was aware of the fact that the goods manufactured by the appellant on job work basis for M/s. Diya Pharmacy would be used by M/s. Divya Pharmacy for manufacture of finished goods in respect of which they are availing fully duty exemption under notification no. 50/03CE. - even if, the appellant in their ER-1 Returns filed by them, were not separately mentioning the clearances of job work goods to M/s. Divya Pharmacy by availing full duty exemption under notification no. 214/86CE, we are of the prima facie view that the extended limitation period under proviso to section 11A(1) would not be invokable and the duty demand would be sustainable only for the normal limitation period and according to the appellant the duty demand for normal limitation period is only about ₹ 18.5 lakhs. - Partial stay granted.
-
CST, VAT & Sales Tax
-
2015 (11) TMI 1429
Validity of reassessment proceedings - Whether the Tribunal was justified in upholding the reassessment orders when before issuing the notice in form ST-15, no reasons have been indicated/recorded by the Ld. VATO on the order sheet - Held that:- VATO was authorised to reopen the assessment, it is plain that the jurisdictional requirement under Section 24 (1) of the DSTA that reasons must be recorded by the VATO himself, as the officer issuing the notice of reassessment on the ground that there were “reasons to believe” that the whole or any part of the turnover of a dealer in respect of any period had escaped assessment to tax, was not complied with. All that was said by the VATO was that he was issuing notices for reopening of the assessment under Section 24 (1) DSTA “as per direction of higher authorities.” This is not a mere procedural irregularity that can be condoned by remanding the matter to the VATO for a fresh reassessment proceeding. It goes to the very root of the matter since what is sought to be done under Section 24 of the Act is to re-open an assessment. - Court concludes that in the present case the jurisdictional requirement of the VATO having to record the “reasons to believe” preceding the issuance of the show cause notice to the Assessee under Section 24 (1) DSTA was not complied with. Consequently, the entire re-assessment proceedings are bad in law. - Impugned order is set aside - Decided in favour of assessee.
-
2015 (11) TMI 1428
Cancellation of registration - proof of address - petitioner contended that, there is no mandatory provision in the Tamil Nadu Value Added Tax Act, 2006 that the Petitioner has to produce no objection certificate from the landlord. - validity of Lease agreement produced - failed to produce the original agreement - Held that:- Petitioner was given sufficient opportunity of furnishing a representation, written submissions and being heard. However, there is no evidence produced by the Petitioner to show that they fulfilled their obligations under the said provisions of Act . As per the provisions of Section 39 of the Tamil Nadu Value Added Tax Act, 2006, for good and sufficient reasons, the authority, granting the certificate of registration, can cancel the registration certificate. According to the said provisions, the impugned order has been passed, on the reason that the original lease agreement was not produced, in order to verify the genuineness of the document in question. Further, all the above disputed facts, raised by the Petitioner and the 2nd Respondent, cannot be gone into in this Writ Petition. Since there are various disputes raised between the parties, the same can be agitated by the Petitioner before the Revisional Authority by filing a revision. - Decided against assessee.
-
2015 (11) TMI 1427
Works contract activity or pure sales activity - printing annual report as per the specification - Exemption on the sales turnover - penalty under Section 12(3) of the Tamil Nadu General Sales Tax Act - Held that:- Assessee undertook the work of printing annual reports as per the instructions of the customers. The items were printed for their exclusive use on works contract basis. When the predominant intention is for printing annual report as per the specification given by the customer, it is, therefore, in the nature of works contract. Where the finished product supplied to a particular customer is not a commercial commodity in the sense that it cannot be sold in the market to any other person, the transaction is only a works contract. - work executed by the assessee related to printing of materials and such printed materials are meant for particular customers, who placed orders and it cannot be sold in the open market like any other goods. Going by the principle laid down in the above-said decision of the Apex Court [1988 (1) TMI 329 - SUPREME COURT OF INDIA], which was followed by this Court in the subsequent decisions, we have no hesitation in accepting the case of the assessee that the transaction in question does not call for any liabililty under the Act. As pointed out by the Apex Court, the mere fact that in the execution of the contract for work, the paper owned by the assessee stands transferred to the contractee incidentally would not lead to the inference that the transaction is only a sale and not a works contract. - Decided in favour of assessee.
|
